Takealot warns about Temu and Shein

The Takealot Group has taken aim at Chinese clothing manufacturers Temu and Shein as well as policymakers, calling for reform within the e-commerce sector that supports South Africa’s localisation efforts and fair competition.

In its 2024 financial results, the group called out the need to create a fair playing field in the South African e-commerce sector, given the increased competition from international retailers such as Amazon and Shein.

Temu and Shein directly compete with Takealot’s Superbalist.com, an online clothing retailer.

“The rise of e-commerce platforms such as Shein and Temu in South Africa underscores a growing concern that threatens the nation’s reindustrialisation and localisation efforts,” Takealot said.

It argued that business models that flood the market with inexpensive products create an imbalance that hinders the sustainability and development of local industries.

“These e-commerce platforms exploit outdated regulations and loopholes by using shipping methods that allow them to offer products at exceptionally low prices while avoiding duties, taxes and other government fees imposed on conventional retailers,” it argued.

This refers to the so-called de minimis rule that allows all packages under R500 to be imported with a 20% duty and no VAT.

However, the South African Revenue Service (SARS) said such small parcels would be taxed at the appropriate rate from 1 July — which is 45% duty for clothing before VAT is added.

Takealot said regulatory gaps in the e-commerce sector made the market unconducive to fair competition, which “leaves domestic retailers, both online and offline, at a disadvantage.”

“It is imperative that policymakers craft regulations to level the playing field, ensuring all participants adhere to the same standards and practices and contributes fairly to the national economy,” it continued.

“If unaddressed, the disparities will continue to widen, placing local businesses at a further disadvantage.”

South Africans support Temu and Shein

Despite Takealot being a local business, many South Africans have come out in support of Shein and Temu because of their cheap prices.

Consumers argue that local retailers, although marketed as affordable, are priced out of reach of most South Africans.

One petition aimed at preventing the tax increase, titled “Petition for SARS not to increase tax on Temu and Shein orders,” had garnered over 15,000 signatures at the time of publication.

In response to the duties, the petition argues that “South Africans cannot afford this. We buy from Shein and Temu because we cannot afford clothes from local businesses. The point of Shein and Temu is affordability.”

National Clothing Retail Federation executive director Michael Lawrence disputed the claim that people who can make online credit card purchases on these sites are vulnerable consumers.

“We are talking about a fundamentally middle-class consumer here,” Lawrence said in a recent Business Day TV interview.

He argued that his organisation represents “far more vulnerable consumers” in the retail world, many of whom are employed within the manufacturing sector and positively affected by the taxes.

“What is true, of course, is that the household purse for all population segments has been under substantive stress for the last decade.”

Lawrence acknowledged that this is an uncomfortable period for consumers but that they must look at the big picture.

One of the main reasons for these duties to be placed on low-value and small-volume imports is to protect the local clothing industry, which cannot compete with the pricing models employed by Temu and Shein.

This comes back to Takealot’s argument for protecting the local clothing industry.

Lawrence also takes this position, saying that although consumers are experiencing financial difficulties, it is crucial to prioritise the jobs and welfare of those working within the local sector.