The head of technology firm Naspers, which operates the largest e-commerce platform in SA, continues to believe that Takealot can effectively defend its place against US giant Amazon, which, according to a leaked report, is expected to launch locally in the coming months.
While Naspers, valued at about R1.1-trillion on the JSE, is primarily focused on its international investments, the group maintains two units in SA — publisher and news outlet Media24 and Takealot.
Amazon has for years largely stayed away from investing heavily in the African market due to poorly developed infrastructure that would make it difficult to implement its famous next-day delivery service. That lack of investment has so far given local
e-commerce players such as Nigeria’s Jumia and Takealot a huge leg up in their respective markets.
Naspers CEO Bob van Dijk says it would be hard for Jeff Bezos’s firm to replicate what Takealot has done in SA.
“Takealot has built a very well organised logistics and delivery network. They’ve spent more than a decade doing it at scale, which allows for efficiency and predictability. And I think they’ve been able to launch a customer proposition that people like,” he said during a media call when the group reported its annual earnings at the end of June.
A big part of Takealot’s advantage, underpinning Van Dijk’s confidence, is the delivery network built across its group of businesses. As well as the main site, Naspers also owns online fashion retailer Superbalist, Mr D Food and logistics business Mr D Courier.
The company’s delivery network consists mainly of drivers in cars and on scooters, with pickup points countrywide.
“There’s always going to be competition in a market that is growing. E-commerce is certainly growing in SA and competition is a healthy thing. People are quite enthusiastic about the quality of service, the pricing, logistics and predictability. I don’t think that’s easy to replicate,” Van Dijk said.
Over the pandemic period, internet businesses have largely experienced growth given increased levels of digitalisation and online traffic. Takealot has undoubtedly been a beneficiary, with many consumers turning to it as an alternative to visiting physical retail centres. The unit has also benefited from increased demand for online food delivery services.
In the year to March, it generated about R24.4bn gross merchandise value (GMV) — the total value of merchandise sold over a given period through a customer exchange site, up 46% over the prior period. Revenue grew 36% for the period to about $824m (R13.4bn). Like many of Naspers’s businesses in the growth stage, Takealot has yet to become profitable, though the reporting period did much to improve its position. It remained near breakeven, with a trading loss of $7m.
Growth for Takealot.com was driven by third parties selling goods on the platform, making up 52% of GMV, outpacing sales of its own inventory. Naspers said the platform “successfully navigated the challenges of global supply chain constraints across multiple categories, especially consumer electronics.” Takealot.com had revenue growth of 29% for the year.
While Takealot continues to defend itself against international players, it has been accused of abusing its size in the local market.
In November 2021, the Competition Commission said it had evidence that Takealot had used intimidation and threats of retaliation to dissuade disgruntled retailers and entrepreneurs that use the platform to do business from testifying before the commission about the group’s alleged uncompetitive practices.
Information presented before the commission showed that Takealot had grown its marketplace from six sellers initially in 2014 to 5,500. The group employs 5,533 staff, has more than 1.8-million customers and 1-million orders are placed each month.
Superbalist managed to defend it place, despite increased competition from brick-and-mortar retailers owing to a relaxation of Covid-19 restrictions over the past year. The company, which is one of SA’s largest online fashion sites, grew revenue by 55% and improved its trading loss margin to 7% during the year.
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