Takealot takes pain

Takealot has recorded a trading loss of R252 million over the last financial year and warned that Temu and Shein are threatening the industry.

This information was included in Naspers’ annual report for the 2024 financial year, which was released on 24 June 2024.

Takealot is South Africa’s premier eCommerce business and includes, and Mr D.

It has achieved twenty-six times gross merchandise value (GMV) growth over the past eight years and is confident that its growth will continue despite headwinds.

Among these challenges, rising interest rates and inflation depressed consumer demand while load-shedding created strain throughout the economy.

The online shopping platform added that competition increased throughout the year as competitors continued to invest heavily in their eCommerce capabilities.

It said global competitors, like Temu and Shein, have made strong inroads into a price-conscious South African market.

Despite the headwinds, Takealot delivered a 3% growth in GMV and an 8% growth in revenue in local currency. grew GMV by 13% and reduced trading losses by $4 million in local currency, excluding M&A from the previous financial year.

Its marketplace exceeded 10,000 active sellers in March 2024 and is a key channel for many small businesses.

Despite tough trading conditions in its traditional middle-income market, Mr D’s GMV increased by 16% in local currency.

The Mr D’s business reached profitability for the first time, with a trading profit of US$3m for the financial year.

Takealot said Superbalist’s revenue growth has struggled because of the acceleration of international players offering cheap clothing products in South Africa.

Superbalist continued to focus on optimising its product offering by limiting private labels to certain subcategories and partnering with global fashion retailers.

Takealot profitability disappointment

Takealot’s top priorities for the last financial year were improving profitability and managing competition.

It said operating costs increased due to the impact of new warehouses and new hires in the prior year. However, it was able to contain costs by scaling down activities, driving efficiencies, and implementing a hiring freeze.

Takealot has taken action to mitigate the effects of higher fuel prices by installing diesel tanks at distribution centres. The online retailer has also encouraged self-collection by customers at convenient pickup points.

Despite these interventions, Takealot could not contain costs to a level where the company would become profitable.

Takealot has not been able to turn a profit since it was founded fifteen years ago, despite a plan to achieve this important step three years ago.

Five years ago, former Takealot CEO Kim Reid said the company was set to become profitable in 2021 and was on track to achieve this goal.

Between 2019 and 2021, Takealot significantly reduced its losses, giving the market confidence that it would reach profitability in the 2022 financial year.

However, Takealot has since gone in the opposite direction. The online retailer incurred a loss of $22 million (R407 million) in 2023, higher than the $7 million (R129 million) a year earlier.

The latest loss of $14 million (R252 million) is an improvement from last year. However, it is still much worse than in 2022.

There is also no clear indication that the situation will improve to show a profit over the next year.

Takealot remains upbeat

Despite the numerous challenges, Takealot remains upbeat about its prospects. This is partly fuelled by the growing South African eCommerce market.

South Africa’s online retail sector grew 29% to R71 billion over the last year and is rapidly becoming a significant portion of total retail sales.

A study by World Wide Worx forecasts that the online retail sector will pass the R100 billion mark to account for 10% of total national retail sales in the next two years.

Much of this growth is attributed to traditional brick-and-mortar retailers’ strategic shift towards competitive eCommerce and enhanced customer service.

To cement its position in the market, Takealot is investigating opportunities to expand its platform while increasing investment in its logistics and supply-chain infrastructure.

The company’s focus on delivering profitable growth across all businesses remains the leading priority.

“The group has embarked on a major programme to upgrade much of its platform to ensure the business can easily handle continued growth and expanding services,” it said.

The objective is to produce a business that is more resilient and flexible and can scale quickly and effectively.

It will also continue to look for more ways to support all participants in its ecosystem. This includes exploring ways to help more new businesses participate and succeed.

“The aim, as ever, is to enable as many people and businesses as possible across South Africa to benefit from Takealot,” it said.


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