South Africa’s e-commerce market is changing dramatically as global competitors like Amazon and Temu put increasing pressure on Takealot, the country’s largest retailer.
Industry analysts on Monday noted that the entry of foreign marketplaces such as Shein, Temu, and Amazon marked a new phase of digital competition in South Africa.
The entry of these global competitors is reshaping consumer expectations and business strategies, prompting local retailers to innovate and adapt rapidly.
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Takealot has long led South Africa’s e-commerce market. But now Amazon, which started doing business in the country on May 7, 2024, is giving Takealot a run for its money.
Amazon’s established logistics network and vast product catalogue seriously challenge Takealot’s market share. Meanwhile, Temu, known for its aggressive lower pricing and extensive product range, has quickly gained traction among South African consumers seeking affordable options.
This battle for market share is not just about products; it encompasses logistics, pricing strategies, and the ability to meet consumer demands in a rapidly evolving digital marketplace. As these companies vie for dominance, they influence consumer behaviour and expectations regarding delivery times, product variety, and pricing transparency.
The rise of international competitors
Thomas Kingombe Kock, managing director at BCG, said, “Although some larger South African firms like Takealot and Checkers have a head-start, the market has yet to coalesce around dominant digital frontrunners.” This fragmentation presents challenges and opportunities for local retailers as they navigate the complexities these global giants introduce.
Temu and Shein have rapidly gained popularity due to their extensive product offerings at competitive prices. However, they face challenges related to international delivery times and customs processes that could hinder their regional growth potential.
Takealot’s strategic response
In response to this stiff competition, Takealot focuses on enhancing its last-mile delivery solutions and expanding its reach into underserved markets. The company recently announced plans to recruit 1,000 delivery drivers in Mpumalanga to improve accessibility for township residents who have historically had limited access to e-commerce services.
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Tshepo Marumule, Takealot’s head of external affairs, emphasised the importance of this initiative: “People need to know that they don’t have to go all the way to Mbombela to have access to what they need, as they can have it delivered.”
Despite these efforts, Takealot faces significant challenges. The company reported a loss of $22 million (R407 million) in 2023, highlighting ongoing financial struggles despite achieving substantial growth in gross merchandise value (GMV).
Takealot also worries about the distorted competition landscape caused by foreign companies taking advantage of legal loopholes that let them offer lower pricing without paying local taxes. This has led to demands for fair competition laws that would provide equal opportunities for all South African e-commerce players.
With these new changes happening all the time in e-commerce, Takealot and its rivals will need to be able to adapt quickly if they want to do well in this growing market.