Takealot under pressure

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In 2022, South Africa’s online retail market was worth R55 billion, up 35% from the previous year, according to a report by World Wide Worx and Mastercard.

A surge in demand for home delivery that began during the prolonged lockdowns propelled online sales development.

According to Arthur Goldstuck, CEO of World Wide Worx, revenues from online retail will increase by 25% this year and total R68 billion.

“It’s interesting to note that internet retail in South Africa will account for more than 5% of all retail sales. Many people will take notice to it since it is a magic mark, he claimed.

Takealot is still in charge of South African eCommerce. With a gross merchandise value (GMV) of almost R27 billion, it represents almost half of all online sales in the nation.

However, in 2022, it had a sharp slowdown in growth. Over the past year, Takealot’s GMV growth rate has decreased from 72% to 15%.

Also read: See How To Sell On Takealot.Com

 

The loss over the previous reporting period increased dramatically due to the significantly decreased growth rate and rising operational expenditures.

The loss suffered by Takealot climbed from R34 million for the six months ending in September 2021 to R221 million for the same period in 2022.

The trading margin for Takealot has also deteriorated, moving from -1% to -3%.

With more local and international competitors, Takealot’s situation won’t get much better in the upcoming year.

Checkers Sixty60, Mr. Price, Makro, Game, JD Group through Everyshop, and TFG through Bash.com are all making significant investments in their local eCommerce businesses.

Between July 2021 and July 2022, Checkers Sixty Six’s revenue increased by 150%. From April 2022 to April 2022, Mr. Price claimed an increase in online retail sales of 48.2%.

In South Africa, the online sales of Woolworths Food and Makro, Game, and Builders each increased by 45.4% and 50%, respectively.

However, Takealot is less worried about regional eCommerce competitors undermining its dominant market position.

The largest eCommerce company in the world is set to launch in South Africa.

Due to its Prime membership and position as a global leader in online retail, Amazon is a dangerous opponent.

Takealot will be under pressure from Amazon, which is well recognized for its aggressive pricing and top-notch third-party marketplace.

Mamongae Mahlare, CEO of Takealot Group, downplayed the significance of Amazon’s expected South African launch.

The opening of an Amazon marketplace in South Africa in 2023, according to her, will be a “compliment” to Takealot and its clients.

Mahlare said, “It’s a fantastic credit to Takealot and the team who grew this company to where it is today, as well as to our customers in South Africa who have supported that growth.