South African online store shuts its doors

Online store Snatcher has closed down after more than eight years in business.

Owner Dirk van Greuning told MyBroadband the company went into voluntary liquidation at the end of August after suffering a series of setbacks.

Several concerned customers with pending orders wrote to MyBroadband on Thursday after visiting the Snatcher website and being presented with a notice that it had shut down.

“Please be advised that DHD Investments T/A Snatcher Deals, has ceased all operations. Further details to be provided,” it stated.

Based on the CIPC records for DHD Investments, the company had maintained an annual turnover of more than R25 million since 2021.

In 2019 and 2020, its annual turnover was between R10 million and R25 million.

Van Greuning explained that they had found their niche in the market by importing low-cost and off-brand electronics from China to South Africa.

However, Temu’s arrival in South Africa in January 2024 upended their business. It was selling the exact same products for much less than Snatcher could get them.

“Aggressive Chinese market players, such as Shein and Temu, leveraged substantial marketing budgets and have taken advantage of tax loopholes to flood the South African market with highly competitive pricing,” said Van Greuning.

“Their ability to offer lower prices due to these loopholes has significantly undermined our competitive position. The disparity in pricing and market strategy has made it untenable for us to compete effectively, leading to unsustainable financial losses.”

Van Greuning said they tried their best to remain competitive and, when that wasn’t possible, to adapt.

However, their customer acquisition cost had skyrocketed because they were being squeezed on two fronts — price and marketing cost.

He said that before Temu entered the market, they were paying Google between R0.60 and R0.70 per click on one of their ads.

Temu came in with an incredibly aggressive marketing strategy, pushing the cost per click to R1.80 almost overnight.

The cost climbed even higher as Shein and Takealot responded to the increased competition.

Google uses auction-type models to sell advertisements on its various platforms. Therefore, the more demand there is for specific ads, the more expensive they generally become.

Van Greuning explained that 60% to 70% of their revenue came from Google ads, so the increased cost of marketing had a broad impact.

Snatcher then suffered an even greater blow when Google suspended its account on two occasions — once in March and again at the start of May.

Van Greuning said he was never really told why their account was suspended. This led him to speculate what he thinks might have happened, but he acknowledged that he could be grasping at straws.

For the March suspension, the reason Google gave was “Suspicious payment”.

According to Van Greuning, in an effort to improve cash flow, they switched their Google account from daily to monthly billing.

This resulted in a two-week vetting process from Google, including credit checks, because they would be switching from paying by credit card to making an EFT into the search giant’s local bank account.

He said they weren’t even due for their first payment when the account was suspended.

They appealed and the account was unsuspended two weeks later.

During the process, Van Greuning said they received an account manager, but unfortunately, they could not help prevent or more quickly resolve the second suspension.

Van Greuning said that Google suspended Snatcher from its Merchant Centre system for “Misrepresentation” in May.

This is its broadest category of offence, and Van Greuning said he still doesn’t know why it happened. However, they were unsuspended after the third appeal.

“These suspensions severely disrupted our online operations, limiting our ability to attract and retain customers through digital channels,” he said.

“The resulting financial strain has placed immense pressure on our business, making it increasingly difficult to maintain operational viability and meet financial obligations.”

The end came when Van Greuning discovered that staff were stealing from the company.

“On the weekend of 17 August 2024, it came to light that our internal staff had been engaged in fraudulent activities,” he said.

“Specifically, employees were using coupon codes to make large purchases, with no money being deposited into our account.”

Van Greuning explained that their system allowed customer support representatives to issue vouchers to clients for returns if they elected to receive store credit rather than a refund.

Although their systems had some protections built in, these were circumvented.

For example, he explained that the system would flag accounts that regularly made large purchases as VIPs. However, the perpetrators ensured they didn’t trigger this by using new email addresses and creating fresh accounts every time.

Van Greuning said they closed the office and confiscated everyone’s laptops to conduct an investigation.

“This breach of trust and integrity not only exacerbated our financial difficulties but also undermined the operational stability of our business,” said Van Greuning.

“The fraudulent activities were the final blow to our already precarious financial situation, compelling us to pursue liquidation.”

Van Greuning said that while the website was still accessible until yesterday, all payment gateways had been disabled. It has not been possible to check out any orders since the company entered voluntary liquidation.

Asked what would happen to customers with outstanding orders, Van Greuning said that some had already been contacted and the necessary claim forms sent.

Snatcher still has some assets that can be liquidated to pay creditors — including its warehouse with the stock that remained inside it.

“After the auction has taken place, the liquidator will complete the administration,” he said.

“I am unfamiliar with the entire procedure, but the liquidator, an expert in this field, will handle it by being in contact with all affected.”