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eCommerce Boom Not For SA’s Biggest eTailer As Lockdown Causes Over 80% Revenue Dip


April 16, 2020

South Africa’s top e-tailer is not having a good time

For all the talk of African e-commerce witnessing a significant lift since the ongoing pandemic forced governments to tighten movement restrictions, one of Africa’s biggest e-tailers is not having a good time.

Takealot, the Naspers-backed e-commerce platform that is the biggest of its kind in South Africa, is going through a rough patch due to the lockdown and other restrictive measures put in place by the President Cyril Ramaphosa-led administration.

In two separate sitdowns with Reuters and TechCentral, Kim Reid, CEO of Takealot, revealed that the company’s revenue has suffered a severe hit since the lockdown took effect more than three weeks ago.

Kim Reid, CEO of Takealot
Source: CityPress

Reid said the company’s revenue has fallen by 80-90 percent as they are currently only seeing around 15 percent of their usual sales volumes. During the first two weeks of the initial 3-week nationwide lockdown alone, Takealot lost USD 20 Mn in revenue.

As things stand, the e-commerce company has pretty much become a hand sanitisers and face masks business due to the restrictions allowing only the delivery of goods that are deemed “essential.” The business now faces a struggle to keep the over 2,000 employees on its payroll as the revenue decline continues.

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After the announcement of the initial 3-week lockdown which began on March 27, President Ramaphosa recently extended the restrictive measure by a further two weeks, implying that the lockdown will be on until the end of April, at least.

Online commerce remains restricted in South Africa

In South Africa, online retailers are prohibited from selling or delivering any non-essential goods during the lockdown. This has forced many e-commerce platforms operating in the country to basically become suppliers of toiletries, sanitary products, food, baby products, and healthcare products.

Naturally, Takealot, which also owns clothing store, Superbalist, and food delivery service Mr D Food, has been hit hard by these restrictions. Based on the lockdown rules, Superbalist is prohibited from trading, while Mr D Food has only begun limited deliveries, including for the MediRite pharmacy chain owned by Shoprite.

According to the CEO, Takealot also had to cancel many orders for non-essential goods which were placed before the lockdown, which could not be fulfilled due to the restrictions.

The net effect is that the company’s revenue is plummeting and the company is hopeful that the restrictions are lifted soon, lest things begin to take a deeply negative turn.

“We have our sights set on starting to operate as we normally do on the Monday after the second lockdown. It would be insane not to open e-commerce at that time. I can’t see how any government cannot open e-commerce at that time to get at least part of the economy going again,” Reid said.

Elsewhere, e-commerce is winning

Quite recently, it was reported that several e-commerce companies in South Africa were lobbying the country’s Trade and Industry Minister, Ebrahim Patel, to allow online shopping and deliveries to continue without restrictions. 

They tethered their appeal to the idea that the e-commerce sector provides a valuable service to society while not adding undue risk to the further spread of COVID-19.

“We hereby request that you seriously consider allowing approved courier companies adhering to stringent preventative measures to transport all goods domestically,” a letter to Patel stated.

“We can play a vital part in not only preventing the spread of the virus but ensuring the well-being of South Africans – please allow us to do this.”

But so far, the appeals seem to have fallen on deaf ears. Elsewhere in the world, e-commerce has pretty much been running the show unfettered, helping people get whatever they need without the risk of contact. 

In Kenya where there are no such restrictions to online commerce despite its 225 COVID-19 infections and 10 deaths, e-commerce is on the up.

Takealot and other e-commerce players in South Africa are now imploring the government to loosen the leash and not serve up a cure that is worse than the virus itself since online commerce can give the economy a much-needed lift during such troubling times. 

As Reid put it, “Government needs to start considering the fact that e-commerce may be a small part of this market, but it is a way to start getting the economy going.

“If you look at what’s happened elsewhere in the world, e-commerce has pretty much been trading at full throttle.”

Featured Image Courtesy: mybroadband

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