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Don't you think they are using a failing business model here? Their campaigns aren't resulting in customer loyalty and many people are looking to buy stuff at possibly below cost with free delivery on top of that. At the end of it all I don't think they'll having anything to show for it i.t.o. of capital investments or a customer base.1.5bn Rand in cash blown in 2 years and not really much to show for - other than some warehouses and purchase of small e-commerce shops. valuation should be around 5bn based on all the funding runs done (most are not publicly known). monthly opex must be around 50-80m - ouch...
The business model is not failing, but the approach. Prior to the $100m fund run in 2014, the company has seen a number of "smaller" fund runs totalling more than R250m. Naspers now raised $50m and considering that Tiger Global and Naspers are equal shareholders it would either mean that Tiger would have to raise an equal $50m (or this was a split-raised fund).Don't you think they are using a failing business model here? Their campaigns aren't resulting in customer loyalty and many people are looking to buy stuff at possibly below cost with free delivery on top of that. At the end of it all I don't think they'll having anything to show for it i.t.o. of capital investments or a customer base.
No problem, I actually think Tiger put up another $50m at the same time - otherwise the following makes no sense:Thanks for this insightful post MagicDude4Eva. Takealot is certainly a long play, but sooner or later shareholders will start to demand profits.
Interim results-September 2015 (http://www.naspers.com/int-results.html):During February 2015 the group acquired a 46,5% interest in Takealot Online (RF) Proprietary Limited (“Takealot”) in exchange for the contribution
of its South African etail business, Kalahari.com, and the issue of 612 977 Naspers N ordinary shares. The aggregate purchase consideration in
the transaction amounted to R1,2bn and the acquisition gave rise to a deemed disposal gain of R154m, which has been recognised in Gains on
acquisitions and disposals in the income statement. The group’s interest in Takealot is accounted for as an investment in an associate. The group
has a 41,86% interest in Takealot on a fully diluted basis.
The group invested R716m as part of a funding round of its associate Takealot Online (RF) Proprietary Limited (“Takealot”) during August 2015.
The group now has a 42,2% interest in Takealot on a fully diluted basis.
Very nice summary indeed!The business model is not failing, but the approach. /snip.
Yeah this is my biggest concern. As it's not turning a profit between below cost goods and delivery the vouchers are largely funded by the funding runs. They don't result in it turning a profit at the end of the day. I don't expect them to continue after this funding so the question is how are they going to turn a profit?At the moment, the company demonstrates "incredible growth" in customer acquisition (as people sign up with multiple accounts to redeem vouchers) and revenue (I would expect that their revenue would need to be at least R200m per month). I doubt that the company writes black numbers as most products are sold below/at cost, churns enormous amount of cash in vouchers and has high opex (think 400 staff, warehouses etc). I would guess that their current burn rate is easily R100m/pm and even if they pull back the aggressive marketing, the burn-rate would never be lower than R30m which requires a ton of cash in profit).
I would guess that about 30% of orders result in non-payment - you can place an order and then just not pay - so the order number itself is not a good indicator about company performance. After I think 48 hours the order gets cancelled. I am not sure about Takealot, but I know that Zalando used to have a 60% return-rate on shoes (this was in late 2013/early 2014). A state-of-the-art warehouse (with robotics, ERP system and real-time fulfilment/stock management) will not cost more than R300m (add R300m stock to it and you can then work out the opex burn).When I've compared order numbers on the same day within a few hours of each other, Takealot receives about 2,500 orders per hour.
They also have a brand new modern 30,000m2 warehouse in Cape Town with private security.
Amazon posted close to $30bn in revenue for the year in October. I know that Naspers and Takealot like to compare themselves to Amazon, but the fact is that they do not have AWS, do not run a marketplace (well Kalahari did, but failed with the implementation). Many might not know that Amazon owns brands like Zappos, Twitch.tv, Audible, Goodreads. Amazon posts losses as they heavily invest into disruptive innovation (Amazon Prime, Amazon Locker, Amazon Dash, Amazon Fresh) and is one of the few companies which have been very progressive over the years. AWS for example doubled their revenue in the last 12 months. Amazon could very well post profits if they decided to stop innovation but would then very quickly face competition from Alibaba (which is already becoming very dominant in the US).Amazon has not made much of a profit for years either and that's considered fine. Growth before profit.
You mean this? http://www.takealot.com/sell - I looked in to selling on there, and it's a pretty horrible proposition. Very high rates, and very restrictive.I know that Naspers and Takealot like to compare themselves to Amazon, but the fact is that they do not have AWS, do not run a marketplace (well Kalahari did, but failed with the implementation).
Yep I stopped selling on there now. I was making money on there ,but they are adding more fees.