Takealot’s big Temu, Amazon battle

Takealot-owner Naspers said the business’ growth has been impacted by increased competition from new entrants like Temu and Amazon, with the local eCommerce giant trying new strategies to keep up and retain market share.

Naspers released its interim results for the six months through September 2024 on Monday, which revealed an improved performance for the company.

For continuing operations, Naspers’ revenue increased by 14%, which the company attributes to strong revenue growth in Payments and Fintech, Etail and Food Delivery.

In addition, its earnings from continuing operations increased to $2.0 billion (R36.28 billion) from $1.5 billion (R27.21 billion) in the prior period. 

The company attributed this to increased consolidated adjusted EBIT and improved profitability in its equity-accounted results, primarily Tencent, offset by a lower gain on partial disposal of the investment in Tencent.

Core headline earnings from continuing operations were $1.5 billion (R27.21 billion) – an increase of 74%. 

“This was mainly driven by the improved profitability of our eCommerce consolidated businesses and equity-accounted investments, particularly Tencent,” the company said.

In March 2023, Naspers announced its exit from the OLX Autos business unit, which is classified as discontinued in this set of results.

Losses from discontinued operations during the period were $106 million (R1.92 billion) related to the Autos business unit. 

This includes impairment losses of $84 million (R1.52 billion) relating to Naspers’US operation classified as held for sale.

Despite these hits, Naspers made a comprehensive income of $9.96 billion (R180.67 billion) for the six-month period, a significant improvement from the $717 million (R13.01 billion) loss it made in H1 2023.

While Naspers attributes part of this improvement to the strong performance of its eCommerce segment, the company noted several struggles facing Takealot, its local eCommerce business.

The Takealot group houses three of South Africa’s leading local eCommerce businesses: Takealot.com, Mr D and Superbalist.com. 

During the six-month period, Superbalist.com, an online apparel and footwear retailer, was sold, which Naspers said would accelerate Takealot group’s path to profitability.

“The business continues to face a slow-growing macroeconomic environment and increased competition from new entrants such as Temu and Amazon, impacting Takealot group’s growth,” the company said.

Takealot saw 11% revenue growth and gross merchandise value (GMV) growth of 11%, excluding Superbalist. 

“Takealot group continues to gain market share in general merchandise,” the company said.

In the interim period, the group launched TakealotMore, a subscription loyalty programme, and Mr D has concentrated efforts on sustaining and accelerating the growth of the grocery business.

This saw Takealot.com grow GMV by 10% and revenue by 11%.

“The eCommerce business focused on defending market share, adapting to changes in shopping patterns post the end of load-shedding and opened another distribution centre in Durban in September to increase same-day and next-day deliveries,” the company said.

“Recent trends show a meaningful pick-up in growth as the leadership team makes improvements to the business.”

Mr D grew its revenue by 12%, reaching $58 million (R1.05 billion) in local currency. Naspers said this growth was driven primarily by the grocery business, which compensated for the slower growth in food delivery. 

Food delivery recorded GMV growth of 2%, with groceries delivering GMV growth of 109%, resulting in overall GMV growth of 13%.