What Takealot plans to do with its R960-million cash injection

Takealot is set to receive a R960-million investment from Naspers, making Naspers the majority shareholder of the ecommerce company.

The investment is before the Competition Commission as a merger.

Should it be approved, Takealot CEO Kim Reid said it will be business as usual for them.

“Nothing that we’re planning [to spend the money on] is groundbreaking,” Reid told MyBroadband.

Becoming cash flow positive

“We have a medium-to-long-term plan for how much cash we require in the business. This is not something that’s unusual in these types of businesses,” he said.

Reid used Flipkart in India as an example. Flipkart recently raised a billion dollars in funding “as ongoing capital to keep these platforms going and to get to scale”.

He said the R960 million will take Takealot to a number that will get it to cash flow breakeven and beyond.

The business is cash hungry, employing in excess of 1,200 staff and operating large distribution centres in Cape Town and Johannesburg.

“We have a lot of work to do in the business… run-of-the-mill operational stuff to keep the business running and get to scale,” said Reid.

This includes making their operations more efficient by streamlining processes in their distribution centres.

No crazy specials

Reid said it is a misconception that they’ve used previous cash injections to attract customers by selling products at aggressive prices – even below cost.

“We’re trying to run a profitable business,” said Reid.

They make decisions all the time on whether to have loss-leaders in the business to attract customers, he added.

“The mere fact that we got a cash injection doesn’t affect our deals.”

Now read: Takealot now sells whiskey, spirits, and champagne

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What Takealot plans to do with its R960-million cash injection