Takealot vs Bidorbuy – South Africa’s big marketplace fight

Takealot has a better website in my opinion and I think it makes a difference. Somehow it's just more relaxing to browse products on there.
 
Takealot has a better website in my opinion and I think it makes a difference. Somehow it's just more relaxing to browse products on there.

They just need to fix their search function. It's sometimes easier to search for a product on PriceCheck and then click the link through there to go to Takealot than to search for the product on Takealot which is silly.
 
Bidorbuy has held the title of South Africa’s largest online marketplace for years, but is facing a challenge from the country’s largest online shopping website, Takealot.
I use both but don't believe they serve the same market eg: I'd go to Takealot for new cellphones but BidorBuy for replacement laptop batteries ...
 
MyBroadband asked two of South Africa’s prominent eCommerce experts – who asked to remain anonymous – about the battle.
The first commentator said Takealot and Bidorbuy are two different businesses, and both businesses are likely to be successful.
The second commentator said Takealot is going to be the likely victor, especially with its latest round of funding, which will enable it to strengthen its marketplace.
He said many sellers who migrated from Bidorbuy to Takealot have seen a dramatic increase in sales, which does not bode well for Bidorbuy.
He said the erratic experience, especially related to delivery, associated with Bidorbuy will hurt the platform in the long term.

Just lol.
 
Hahahaha at the second commentator we moved from takealot to bidorbuy
 
Takealot just got expensive recently.... BoB well i don't trust them... Bought one thing and yeah...
 
MyBroadband asked two of South Africa’s prominent eCommerce experts – who asked to remain anonymous – about the battle.

Lol, experts but they want to remain anonymous? Right.

Also the word many was used too many times in that article:

Many commentators predict that ...

many sellers prefer...

many people still enjoy...

many sellers who migrated from...
 
TL;DR: While I appreciate punting companies, the article and opinions of so-called-experts are really superficial and lack proper insight in the industry.


Whoever those two "eCommerce experts" are, they have a very narrow view of the e-commerce world and have either been rushed in their comments or lack a macro-view of what is happening in the market locally and lack the understanding of global trends.

What I post below is my view as a "third eCommerce expert" and although I work for bidorbuy, I will be hopefully objective and without bias. I am also not going to repeat when I posted my views about the recent Takelot funding run and evaluation (here and here and here - but those are worthwhile reads)

I can not publicly comment on our financial position but the most obvious aspect is that Takealot is in the position that they will eventually pay back a USD100m funding run from May 2014 (when 1 USD = ZAR 10.55 - making up a 300-400 million currency loss requires some solid profits). Prior to the 2014 funding run, a number of smaller runs happened (in the region of $10-30m in total). Based on the model I ran and based on the recent R960m funding run, it would place Takealot at an evaluation of about 4-4,5bn (and not the 8bn "experts" suggest). Let's also not forget that an evaluation is just a number and is meaningless unless shareholders can convert it to cash. There are many unicorn stories where companies with high evaluations had to be brought down to earth (Groupon, Uber, Flipkart ....)

In order for those "experts" to understand e-commerce you need to historically unpack what happened to Groupon, Kalahari (and the other Naspers shut-downs in 2014: 5rooms, Style36, SACamera, Kinderelo, 5ounces) and then also understand how Nasper's AIA (= Africa's Internet Accelerator) flopped. You will then also need to bring Rocket Internet into the fold and then a number of "unknowns" (the awesome guys at Loot, Raru, Yuppiechef, Seeds for Africa, Mantality, Geewiz and hundreds more) which contribute to this ecosystem.

While $100m (in 2014 R1bn and now R1,3bn) sounds very intimidating and while the same experts said that the merger of Kalahari and Takelot will cause the demise of e-commerce in South Africa, it only resulted in Karl Ahari losing his job and having to juggle dildos for a German sex-shop. Fast-forward 3 years from 2014 and a billion Rand is gone and resulted in some new warehouses, souped up Mr. Delivery scooters and the purchase of Superbalist and other smaller outlets. Companies who were supposed to be bankrupt by now are still striving (looking at you Raru and Loot) and sadly only a few collapsed (RIP Look&Listen).

Relying on large shareholder contributions (especially if those funding runs are tied to forex) exposes companies to big risk where shareholders will just pull out or stop funding runs. This will collapse your business if you have high cashburn. Other investors will also stop funding to distress a company and dilute shares to allow reinvesting at a higher shareholding. Point is that at some point in time Takealot's shareholders will question the ROI. Although money has been burned excessively and product has been sold under recommended retail price, 3 years of cash burn seems to still mean honeymoon phase but eventually this will run out. The new R960m (based on the previous burn rate) will last less than 18 months.

While centralised shipping and fulfillment is very powerful and predictable, it's scalability will become an issue. A marketplace with tens of thousands of sellers fulfilling through various fulfillment partners might not be very predictable but it will scale infinitely. Some might still remember how last year Santa had to cancel his vacation because products could not be fulfilled on time and people resulted to queue up at a warehouse on xmas eve to get their kid's presents.

I am not going to question the tech being used as everyone will have different challenges. My expectation would however have been that huge amounts of cash would have done something more than throwing half of your operation into AWS (and eventually having to deal with aspects such as POPI and safe-harbor legislation --- never mind the unpredictable USD exchange rates increasing OPEX by a good 30% in two years).

The e-commerce experts also mention the domination in products. Lets be real about it: Selling new products with a SKU is easy and everyone can do it. It is not a differentiating factor. Tomorrow an Amazon can open it's floodgates and would pretty much wipe all traditional e-tailers off the table. Kalahari tried this for years when it wanted to compete on price and eventually decided to merge with Takealot. You will notice that nowadays no-one differentiates on price - it is not sustainable. Long-tail and niche is key. A differentiating factor of a marketplace is to build a sustainable, long-term community and ecosystem. This is something you can not do in tradtional e-tailing.

Some people also mentioned Alexa ranking as an indicator of traffic (others mention Effective Measure or Nasper's owned SimilarWeb) - let's be all clear that all those ranking mechanisms are estimates and can be manipulated. Alexa traffic reports do not correlate with your own analytics measurement and anyone running a website will be able to verify that even Google Analytics measured traffic is inaccurate compared to server traffic stats. In 2012 I have proven that Alexa traffic can be manipulated to boost ranking - it was an easy exercise to validate how ranking works, but Alexa should not be used as a means of measuring success.

Marketplaces and traditional click-and-buy websites can co-exist, and it is always puzzling to read from experts that one business will dominate the others. Those very same experts also predicted that the Takehari merger would shift market penetration but then had to concede that 1+1 is not 2 but rather 1.2 (with regards to customer base - as Takealot did not double their userbase).

When it comes to userbase, let's not look at registered users (half of MyBB registers multiple accounts to use vouchers / discounts) but rather at RPU (revenue per user) and CAC (customer acquisition cost). Ideally you would also want to look at customer retention cost, product churn, returns.

Looking at GMV is also not an accurate reflection of a business: The experts should know better and recent devaluations of Flipkart and Snapdeal have shown that GMV can be misleading. Quoting 100% growth YOY rates are easy in the startup phases as you will start from nothing. Let's revisit those growth rates when you have been in business since 1999 and continue showing consistent growth YoY. Bragging about 100% growth between 2014 and 2015 is irrelevant if you do not take into consideration how much it cost to achieve that level of growth (and how sticky / loyal your customer base is).
 
Bid or Buy takes the old chestnut of 'buyer beware' to new levels. Not really any bargains anymore, companies selling goods at what are often highly inflated prices (presuming that buyers will assume it is a bargain because it is BOB) have squeezed out the private sellers.

Buyers have to also be VERY careful of the horrendous shipping charges. I'm not at all adverse to paying for shipping, but sellers seem to think that if they do actually offer a bargain that they have to regain all the lost profit by charging inflated shipping charges so a low-cost item suddenly costs you upwards of R200 in shipping - yeah go find someone else to rip-off. And guess what, you often can't bung several items from the same supplier together to make it reasonable. Nope, nope and nope.

Take-A-Lot just majorly shot themselves in the foot with their increase in shipping costs. I used to buy regularly every month, have not done so once since the increase. Sorry just not doing it. If other online retailers can offer low cost or free shipping what the heck is wrong with Take-A-Lot (who now OWN their own shipping company) that they can't? Sorry doesn't work like that!

I don't understand how Aramex (PnP) can manage to offer shipping for less than R100 but Take-A-Lot can't? (Forget BoB so many of their sellers are just rip-off artists when it comes to shipping).
 
I used to buy a lot on BidorBuy. One thing I hate of BoB is that there is no dropshipper filter. I hate to browse through items just to find it has dropshipping. I have emailed them few times before about it and the answer is always the same "We will look into it"

Some sellers apart from the dropshippers have ridiculous delivery fees. The real bargains on BoB are very few lately.

With Takealot I have always received great service. Not happy with the increase of shipping costs but usually my order is enough for free shipping. Delivery has always been very fast.

Will be interesting to see how this plays out.
 
I used to buy a lot on BidorBuy. One thing I hate of BoB is that there is no dropshipper filter. I hate to browse through items just to find it has dropshipping. I have emailed them few times before about it and the answer is always the same "We will look into it"

Some sellers apart from the dropshippers have ridiculous delivery fees. The real bargains on BoB are very few lately.

With Takealot I have always received great service. Not happy with the increase of shipping costs but usually my order is enough for free shipping. Delivery has always been very fast.

Will be interesting to see how this plays out.

This - used to buy a lot on BoB years ago but left because I don't have the time to sift through all that.
Let me filter out the dropshippers and I'll come back ;-)
 
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