Takealot warns about Shein, Temu, and Amazon

Takealot warned that new international entrants like Shein, Temu, and Amazon in South Africa’s eCommerce space are a net loss for the country. They exploit loopholes to avoid duties and taxes, hurting local businesses and the economy. 

In Naspers’ latest results, Takealot reported 13% growth in gross merchandise value (GMV)  and 8% growth in revenue in local currency.

Takealot is South Africa’s premier eCommerce business and includes Takealot.com, Superbalist.com 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.

However, 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.

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.

Among Takealot’s challenges, the company highlighted the need to level the playing field in South Africa’s eCommerce sector.

In Naspers’ results, Takealot emphasised the importance of fair competition to benefit consumers, enhance South Africa’s fiscal health, and stimulate eCommerce growth. 

Since its founding, Takealot has been a trailblazer in South Africa’s eCommerce space, expanding online shopping and supporting over 11,000 marketplace sellers. 

The local eCommerce giant said the arrival of international players like Amazon, Shein, and Temu highlights the sector’s potential in South Africa.

Chinese eCommerce giants Temu and Shein have seen their popularity in South Africa skyrocket over recent years. Consumers have been attracted to their low prices and extensive product offerings.

Although the international eCommerce powerhouse Amazon was only recently launched in South Africa, many believe its extensive experience in the field will allow it to easily overtake local players.

Takealot warned that these players also bring challenges, particularly from low-cost imports impacting local industries.

“These eCommerce platforms exploit outdated regulations and loopholes by using shipping methods that allow them to offer exceptionally low prices while avoiding duties, taxes and other government fees imposed on conventional retailers,” Takealot said. 

“This hinders government initiatives focused on revenue generation and collection and undermines South Africa’s sense of sovereignty.”

“The current governance landscape in eCommerce does not sufficiently address the need for fair competition – a disparity that leads to significant revenue losses and reduced capacity for local job creation.” 

Takealot said this also leaves domestic retailers, both online and offline, at a disadvantage. 

Many local retailers share Takealot’s qualms. This issue recently made headlines when South African retailers approached SARS to address what they believed to be an unfair advantage for players like Shein and Temu.

Previously, packages imported into South Africa worth under R500 were taxed at 20%. Local retailers claimed Temu and Shein take advantage of this by breaking up larger orders into smaller quantities and packages to ensure they are under R500.

This allowed these eCommerce giants to sell products for far lower prices than local retailers could, making it harder for them to compete.

To address this and level the playing field, from 1 July 2024, SARS and Customs will levy the same duties and taxes on clothing items under R500 as on bigger orders.

“It is imperative that policy-makers craft regulations to level the playing field, ensuring all participants adhere to the same standards and practices and contribute fairly to the national economy,” Takealot said.

The company warned that if this is not addressed, the gap between offshore and local retailers will widen, further disadvantaging local businesses.

“This will not only inhibit their growth potential but also perpetuate a significant economic drain,” the company warned. 

“Such a scenario threatens the vitality of the local economy and undermines sustainable development efforts.”

The company also warned that this may deter future investments in the country, as investors may be concerned about an unstable and unbalanced market in South Africa.

“Importantly, beyond the regulatory environment, these businesses selling into our country do not invest in physical infrastructure locally, nor do they employ locally – a net loss to South Africa,” Takealot said. 

“We believe it is crucial to quantify the significant current impact of offshore eCommerce on the South African economy, particularly in the manufacturing sector.”

“This form of commerce extracts value from South African consumers without contributing to local communities, ultimately harming small businesses, local manufacturers and the limited job opportunities available.”

Ultimately, Takealot said a fair and competitive marketplace is essential for both local and international businesses to thrive and for consumers to access a diverse range of affordable products.