Takealot under siege
Takealot is under siege. It is losing its CEO Kim Reid and CFO Gary Altini, the Competition Commission is investigating its dominance, and it is facing increased competition.
Takealot is by far the largest ecommerce platform in South Africa, and for good reason. It offers a world-class online shopping experience with a wide range of products and excellent support.
Over the past decade, Takealot developed South Africa’s best online shopping distribution network with warehouses in Johannesburg, Durban, and Cape Town and pickup points across the country.
To ensure great service levels it also owns and operates its own logistics network through the Takealot Delivery Team division.
The company’s multi-billion-rand investment helped it to create the Amazon of South Africa, with competitors like Loot and Makro far behind.
Takealot is, however, facing its biggest challenge yet.
Takealot CEO Kim Reid and CFO Gary Altini are planning to step down as executives in the coming months.
As the co-founder of Takealot, Reid was instrumental in building it into the dominant force it is today.
While Reid will stay on as chairman, stepping back from Takealot’s day-to-day operations is a big loss to the company.
Altini, who joined the business in October 2010, is equally important as he is responsible for the financial side of the business.
He also runs the operations relating to customer payment mechanisms, risk management, reporting, and compliance.
Takealot CEO Kim Reid
These resignations came at a time when many big South African retailers, including JD Group, Massmart, and The Foschini Group, are building significant ecommerce operations.
The COVID-19 pandemic helped to rapidly increase ecommerce adoption in South Africa, and companies are now investing millions to capitalise on this growth.
Massmart, which include Makro and Game, said online sales were a key highlight over the last financial year.
It is now investing heavily in its ecommerce platforms to make it more competitive and improve its distribution and support.
Massmart is also prioritising investment in mobile-first online shopping solutions and specific merchandise categories like DIY, wholesale food, and liquor.
Not to be outdone, JD Group, which owns Incredible Connection and HiFi Corp, is pumping millions into ecommerce.
It recently launched Everyshop, which is a direct competitor to Takealot. With a country-wide distribution network and access to top brands, JD Group is set to become a big online player.
Everyshop’s Stef Michael said their scale makes it possible to get products to clients faster and more affordable than most competitors.
Other niche players, like TFG, Woolworths, Checkers, and Pick n Pay, are also building excellent online shopping capabilities.
Checkers, for example, is rapidly growing its Sixty60 service which allows clients to order groceries from their nearest store and have them delivered in 60 minutes.
TFG, in turn, is scaling up its online shopping operations to take on Superbalist, which is part of Takealot.
TFG recruited top ecommerce executives to improve its ecommerce operations, and with bags of cash and a country-wide network it is a noteworthy competitor.
Checkers Sixty60
As if this increased competition is not enough to keep Takealot’s management up at night, it is also facing a Competition Commission inquiry.
The Competition Commission’s new market inquiry into South Africa’s ecommerce industry has a strong focus on Takealot.
The commission said Takealot is much bigger than other online retailers in South Africa, which warrants concern over its dominance of the market.
The fact that Takealot operates a marketplace, which makes smaller online shops dependent on it as a route to market, is putting it firmly in the Competition Commission’s crosshairs.
The commission is particularly concerned that a big player like Takealot has the potential to favour themselves and squeeze out competitors.
The new Takealot management team will have the unenviable task of maintaining its competitive advantage without looking too dominant.
Even without any anti-competitive behaviour, it can still face sanctions to limit its market power.
Takealot is therefore facing a challenging time and it will not be easy to protect the lead it has built over the last decade.
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