SA’s Top Online Retailer Plots Fightback In Faceoff With Global Giants

By  |  July 3, 2024

South African e-commerce leader Takealot is revamping its strategy to counter the rising tide of foreign online retailers like Shein and Temu. These aggressive players have been rapidly capturing market share, particularly in the clothing sector, with some accusing them of exploiting loopholes in import tax regulations.

Takealot’s fashion arm, Superbalist, has been hit particularly hard. The company is planning to limit its own-brand offerings and prioritise attracting established international brands, like its current partnership with H&M. This shift reflects Superbalist’s need to differentiate itself in a market increasingly saturated with low-cost options.

“Superbalist has seen a difficult year,” Takealot Group CEO Frederik Zietsman told the Sunday Times. “We need to reposition [Superbalist’s] offering and think about some value-add we can bring in.”

The Takalot Group — comprising the flagship online store, food delivery platform Mr D, and fashion arm Superbalist — reporting a trading loss of ZAR 252 M (~USD 14 M), which Zietsman attributed to Superbalist.

Takealot has long advocated for a more balanced e-commerce playing field in South Africa. The company argues that past loopholes in import tax regulations gave foreign retailers an unfair advantage. These loopholes allowed them to import smaller packages at lower duty rates.

“The rise of e-commerce platforms such as Shein and Temu underscores a growing concern that threatens the nation’s reindustrialisation and localisation efforts,” Takealot stated in its 2024 financial results.

However, the recent implementation of stricter import tax regulations by the South African Revenue Service (SARS) could be a game-changer. These regulations now impose the same duties and VAT on all clothing imports, regardless of value.

Consumer Concerns and Balancing the Act

While the new regulations may create a fairer marketplace for local retailers, some South African consumers are concerned about the impact on affordability. Shein has become a popular choice due to its low prices, and some argue that local retailers simply cannot compete.

“South Africans do not see eye to eye with Takealot,” a recent report noted. “Consumers argue that local retailers, although marketed as affordable, are priced out of reach of most South Africans.”

The National Clothing Retail Federation (NCRF) acknowledges the short-term discomfort for some consumers but emphasises the long-term benefits. “These taxes positively affect local manufacturing and jobs within the sector,” said NCRF executive director Michael Lawrence.

The battle between Takealot and international e-commerce giants like Shein highlights the evolving landscape of South Africa’s online retail sector. As competition intensifies, players like Takealot are adapting their strategies to cater to consumer preferences while navigating regulatory changes and advocating for a balanced playing field that fosters local economic growth.

Featured Image Credits: Flicker Leap

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