The lockdown restrictions are crushing ecommerce – Here are the numbers

Every day which goes by without any changes to the lockdown regulations will result in more online businesses closing and more jobs being lost.

This is the warning from Takealot CEO Kim Reid, who was speaking to eNCA about the impact of the ecommerce restrictions on businesses.

Takealot has great insight into the South African ecommerce market as it runs its own online platforms and operates a marketplace to enable smaller online shops.

Reid said they had approximately 3,000 business which sold their products through the Takealot marketplace, using its distribution network, payment mechanisms, and marketing.

When the lockdown started on 27 March, the number of shops dropped to 500 because of ecommerce restrictions.

Moving to level 4 did not help much, and 1,000 of Takealot’s marketplace sellers have not sold a single item since the lockdown started.

Additionally, most of the sellers which are selling products are only trading at between 10% to 15% of their previous revenue.

“These sellers cannot continue like this,” said Reid.

Fairness argument frustrates me – Kim Reid

Most countries have allow unfettered ecommerce during their COVID-19 lockdowns, because of the contactless nature of the industry.

In South Africa, however, online shops are only allowed to sell the products which brick-and-mortar shops are allowed to sell.

The reason for this decision, Minister for Trade and Industry Ebrahim Patel explained, is “fairness”.

“If we open up any one category, let’s say ecommerce, unavoidably there’s enormous pressure to do the same for physical stores,” Patel stated.

Reid said this argument frustrates him. “The World Trade Organisation said ecommerce increases competition and enables businesses. There is no competition issue here,” he said.

He also said the argument that there will be too many vehicles on the road is an equally daft, illogical, and irrational.

“Ecommerce should be trading at 100% capacity right now, if not more. If you look at other countries, ecommerce has increased substantially during this time,” said Reid.

Ecommerce restrictions may be relaxed

President Cyril Ramaphosa said in a recent speech that in the coming days, the government will announce changes to level 4 regulations to expand permitted business activities in the retail space and ecommerce.

Reid said while Ramaphosa did mention ecommerce, it is currently unclear what exactly is going to happen.

Meanwhile, Cas Coovadia, CEO of Business for South Africa, has said ecommerce should be opened up “totally” with immediate effect.

Allowing people to do their shopping online not only helps ecommerce companies, but will also kickstart courier services and economic activity, he said.

SARS commissioner Edward Kieswetter also supports the move, saying ecommerce holds great potential for South Africa and should be opened up.

Kieswetter said many people think of ecommerce as a virtual economy – but it opens a full value chain of economic activity.

The DA is taking the matter one step further, and has launched court action to “end the national hard lockdown that is tearing our society and economy to pieces”.

The DA’s lawyers will file papers in the High Court challenging the rationality of the restrictions on ecommerce, and will also challenge the night-time curfew and the 3-hour exercise window.

Takealot CEO Kim Reid interview

Now read: It is a good idea to open up ecommerce – SARS commissioner

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The lockdown restrictions are crushing ecommerce – Here are the numbers