Takealot Expands E-commerce in South Africa

By Nqobile Dludla

JOHANNESBURG (Reuters) – South Africa's biggest e-commerce retailer, Takealot, has hired thousands of personal shoppers to penetrate townships and rural areas amid increased competition from global rivals, according to its CEO.

Growing Competition

Attracted by growth potential, numerous companies have invested in South Africa's price-conscious e-commerce market. Notable international entrants include Chinese fast-fashion retailers Temu and Shein, with Amazon following in May after Temu's January debut. CEO Frederik Zietsman remarked, "You can't argue that they had an impact on the overall retail environment," referring to these global players. He added that the cost of doing business has risen significantly.

Companies view South Africa as an entry point for continental expansion due to higher mobile internet users, greater smartphone penetration, and new payment methods like Buy Now Pay Later. Takealot Group, owned by tech investor Naspers, encompasses Takealot.com, which offers a variety of products from household goods to electronics, and Mr D, a food and grocery delivery service.

However, a challenging economic climate and fierce global competition have slowed Takealot's growth. Gross merchandise value growth for Takealot.com increased by only 10% in the first half ending September 30, down from 15% the previous year. Furthermore, its market share fell from 26.5% to 20.9% in 2023, according to a report by World Wide Worx in partnership with Mastercard, Peach Payments, and Ask Afrika.

Personal Shoppers Initiative

To attract more customers in townships and rural areas, Takealot is recruiting personal shoppers to assist primarily non-tech-savvy consumers. Zietsman stated that these targeted areas are where e-commerce struggles to gain momentum. As part of this initiative, the company has recruited about 2,500 personal shoppers and aims to reach 5,000 by 2028.

Personal shopper Achumile Vellem, who joined in October, reported purchasing over 150 products, including air fryers and cellphones, on behalf of clients, particularly from rural areas.

Dark Stores and Automation

Takealot plans to expand its “dark stores” in the coming year. Currently, the company operates four dark stores solely for fulfilling online orders near major distribution centers. In October, Takealot introduced 54 robotic machines at its Johannesburg facility as part of a 19 million rand investment to enhance processing capabilities for large items. The Cape Town facility has also seen increased automation to manage a higher volume of parcels.

> Note: 1 USD = 17.6524 rand.