Takealot sells Superbalist

Superbalist has been acquired by a South African consortium of retail and private equity investors led by Blank Canvas Capital.

MyBroadband learned of the sale from an anonymous source, and Takealot confirmed that it no longer owns Superbalist as of 1 September 2024.

“This strategic acquisition will support Superbalist’s ongoing growth, allowing the Takealot Group to dedicate its efforts to further expanding Takealot and Mr D,” the company said.

“We extend our best wishes to the Superbalist team as they embark on this new chapter in their journey.”

Takealot said that throughout the transition period, Superbalist services will continue to operate without interruption, ensuring customers experience no disruptions.

“Takealot will also continue to provide warehousing and logistics services to Superbalist through a multi-year service agreement,” it said.

News that Takealot was looking to offload Superbalist first emerged in March, when well-placed industry sources told Daily Investor that Takealot was investigating the sale of the online clothing retailer.

Superbalist, initially known as Citymob, was founded in November 2010 by three local entrepreneurs – Luke Jedeikin, Claude Hanan, and Daniel Solomon.

Citymob quickly became a favourite among online shoppers thanks to its exclusive experiences, premium products, and hand-selected styles.

In 2013, Citymob pivoted the business to fashion e-commerce as Superbalist, which became South Africa’s largest online fashion retailer.

Naspers-owned Takealot acquired Superbalist in August 2014 after it received a US$100 million cash injection to expand its South African operations.

At the time, former Takealot CEO Kim Reid said he was excited about the acquisition because the millennial generation is deemed the most powerful and relevant market.

Superbalist continued to operate as an independent brand under its existing management team, led by Hanan and Jedeikin.

However, the founders left Superbalist in December 2019 and joined The Foschini Group (TFG) two years later to help the company realise its e-commerce ambitions.

Last year, Superbalist embarked on a Section 189 process to restructure its business.

It explained that growth post-Covid has not reached the levels that had been forecast.

“As such, we need to reevaluate our structures to ensure that the business operates effectively in this current economic environment,” it said.

It is understood that Takealot is confident it can compete against Amazon, which launched its South African marketplace this year.

However, it was concerned that low-cost Chinese retailers like Shein, Temu, and Wish may negatively affect Superbalist’s operations.

When Takealot was investigating the sale, Shein and Wish already had an established presence, and Temu had made a strong entry into the South African e-commerce market.

Experts said it made sense for Takealot to offload Superbalist and focus on Takealot with Amazon entering the market.

Temu and Shein customs loophole

Shein and Temu came under fire this year for allegedly exploiting a tax loophole to import clothes at well below the duties typically levied.

A concession from the South African Revenue Service (Sars) published in 2007 allowed courier companies to pay a flat 20% duty on certain imports to ease the administrative burden on customs.

This is much lower than the regular clothing import duties of 45% plus 15% VAT to protect South Africa’s local industries.

Retailers and producers in the clothing sector raised the alarm when they realised that Temu and Shein were using the 2007 concession to pay the lower tax rate on clothing imports.

They caught the attention of Sars commissioner Edward Kieswetter, who promised to address the issue.

Kieswetter acknowledged that South Africa’s tax rules and administration processes weren’t geared for the era of online shopping.

When they were first developed, “it was a couple of people buying from Amazon.com and Alibaba,” he said.

Kieswetter said shopping habits have shifted since, and Sars needs to modernise its processes.

Initially, the tax collector promised to start charging the full 45% duty and VAT on all clothing imports from 1 July 2024.

However, this didn’t happen. Sars issued a statement in August confirming that the changes were never implemented and that it had a new plan that it would implement from 1 September.

Sars said it would begin by charging VAT on top of the flat 20% duty. Additional, permanent changes will follow in November.

From November, e-commerce goods will be categorised in line with the World Customs Organisation (WCO) framework for customs inspection.

Kieswetter said Sars would also turn to “the greater use of data, artificial intelligence, machine learning and algorithms to better facilitate trade while minimising risks to the economy”.