Takealot tapping into a R1 trillion market that SARS can’t touch in South Africa

The Takealot Group believes tapping into the country’s large informal market will expand e-commerce in South Africa, broadening the market so that more players can take a share.

The e-commerce giant has already made some inroads in townships and rural areas across the country through its personal shopper programme.

This comes as the Takealot Group, particularly its e-commerce platform Takealot.com, faces mounting pressure from new market entrants, including global giants like Amazon.

At a recent media roundtable following the release of the group’s results, Takealot Group CEO Frederick Zietsman explained that e-commerce is still in its infancy in South Africa.

He said that, in real terms, the majority of South Africans have yet to buy something online and engage in the e-commerce market.

However, Zietsman also said the e-commerce industry is growing exponentially, and there is much value to unlock for market players like Takealot.com.

He shared his belief that there is huge untapped potential in South Africa’s informal market, which refers to rural and township areas across the country that are underdeveloped compared to their urban peers.

The informal market is estimated to be worth between R750 billion and R1 trillion, comprising hundreds of thousands of businesses and even more residents.

Tapping into the potential of the informal market is far easier said than done, as these areas are notoriously difficult for formal market players to penetrate.

This is because it operates very differently from the formal market, and many businesses in the informal sector are unregistered and therefore largely hidden.

Informal economy expert and ‘Kasinomics’ author GG Alcock recently explained that even the South African Revenue Service (SARS) struggles to operate in the informal market.

Alcock said SARS does not have service centres in many townships across South Africa, which makes it extremely difficult for businesses in the sector to become registered.

Takealot’s plan

The Takealot Group’s plan to bypass the issues many formal businesses face when looking to enter the informal market involves an initiative started two years ago.

Launched in 2024, the Takealot Township Economy Initiative is aimed at fostering local manufacturing, supporting small businesses, and creating jobs in underserved South African communities. 

To this end, the Takealot Group has already planted three franchises in townships across South Africa.

Zietsman explained at the roundtable that this not only lowers the company’s cost to serve these communities but also speeds up their service, which benefits the local consumers.

Another relatively unknown segment of this initiative is the Takealot Group’s Personal Shopper Programme.

Through this programme, South African citizens and permanent residents purchase products on Takealot.com on behalf of the public, earning commission fees for their services.

Zietsman revealed at the roundtable that there are already 16,000 personal shoppers who form a part of the programme, with the company having surpassed its goal of 5,000 by 2028.

He explained that one of the biggest reasons e-commerce has yet to “take off” in townships is a lack of trust, with community members often distrustful of new businesses looking to enter.

This, he said, is why the personal shopper programme targets local community members who know and understand their own areas and whom other locals can trust.

To further foster trust, Zietsman explained that the Takealot Group has not taken a “cookie-cutter” approach to its township initiative. 

Rather, the company has gone into each community to understand its specific needs and tailor its offerings to align with them.

“We need to unlock that mindset shift, which will see the township market thrive on the demand and supply side,” he said.

At the same roundtable, the Takealot Group’s head of external affairs and public policy, Tshepo Marumule, explained that the company’s township initiative is not “instructive inclusion”.

Rather, he said, the company aims to build a mutually reinforcing and sustainable model that includes townships and rural areas in the digital economy.