Naspers Fears Onslaught Of Amazon & Temu Is Slowing Takealot

Naspers has sounded the alarm on escalating competitive pressures as Amazon and Temu aggressively challenge Takealot Group’s once-dominant position in South Africa’s e-commerce market. The financial results for the period ending September 30, 2024, paint a mixed picture for the group, with revenue and gross merchandise value (GMV) growth of 11% year-on-year—but a closer look reveals significant challenges ahead.

Amazon’s South African entry earlier this year and Temu’s rapid rise through aggressively low pricing have reshaped the competitive landscape. In its latest earnings report, Naspers acknowledged that “increased competition from new entrants such as Temu and Amazon” is squeezing Takealot’s growth, which has slowed compared to the 15% GMV growth seen in the same period last year.

Adding to these challenges, Naspers noted that South Africa’s “slow-growing macroeconomic environment” is exacerbating difficulties, although Phuthi Mahanyele-Dabengwa, Naspers’ South Africa CEO, expressed optimism. “We saw encouraging developments in South Africa’s operating environment in the first half of this financial year…and we expect [our businesses] to accelerate their performance, through our strategy of driving innovation and adopting an artificial intelligence (AI) first mindset.”

Takealot Group CEO Frederik Zietsman previously highlighted the impact of foreign retailers such as Shein and Temu, particularly in the clothing segment. Takealot’s fashion arm, Superbalist, struggled so significantly that the company decided to offload it to a private equity consortium to accelerate profitability.

Superbalist’s struggles were emblematic of larger industry dynamics. Rivals like Shein had exploited loopholes in South Africa’s import tax system, allowing them to flood the market with low-cost goods. While the implementation of stricter regulations by the South African Revenue Service (SARS) in 2024 has levelled the playing field, Takealot remains under pressure to differentiate itself.

In response, the company has launched strategic initiatives, including TakealotMore, a subscription loyalty program modelled on Amazon Prime, and invested in logistics, opening a new distribution centre in Durban to improve same-day and next-day delivery capabilities.

The flagship e-commerce platform saw GMV growth of 10% year-on-year, but this pales compared to the growth seen in prior years. Still, the platform continues to gain market share in general merchandise, with Naspers pointing to recent leadership changes and operational improvements as drivers of a “meaningful pick-up in growth.”

Takealot’s food and grocery delivery arm, Mr D, provided some bright spots. Revenue rose 12% to USD 58 M, driven by a 109% GMV surge in grocery deliveries, which offset a sluggish 2% GMV growth in food delivery. The company has doubled down on expanding its grocery business, seeing it as a key growth lever.

Takealot’s challenges highlight the broader changes in South Africa’s e-commerce market. Amazon, the world’s largest e-commerce retailer, is leveraging its global scale to offer competitive pricing and logistics capabilities. Meanwhile, Temu’s low-cost strategy continues to resonate with price-sensitive consumers.

Naspers has responded by advocating for regulatory reforms and adopting innovative strategies, but consumer sentiment remains a hurdle. “South Africans do not see eye to eye with Takealot,” a recent report noted, with critics arguing that local e-commerce platforms, despite being marketed as affordable, are often priced out of reach for many.

The stakes for Takealot could not be higher. Naspers’ strategy to prioritise innovation and customer experience, alongside streamlining operations like the Superbalist divestment, demonstrates a focus on long-term profitability. But in the short term, growth remains muted as competitors continue to erode Takealot’s market share.

Nevertheless, Mahanyele-Dabengwa remains bullish about South Africa’s economic trajectory even as the onslaught from Amazon and Temu underscores the urgency for Takealot to solidify its position.