An 11-year lead has cemented Takealot as the biggest online retailer in South Africa. The country’s competition authority said the e-commerce platform used its position in the market to intimidate local suppliers.
The Competition Commission Inquiry into Online Intermediation Platforms was to identify market features that have adverse effects on competition. The market inquiry, which began in 2021 with a provisional report being released in July this year, looked into a number of other platforms including Property24, UberEats, software app stores and Mr Delivery.
Now Takealot will face competition with Amazon, which is expected to launch in South Africa in February next year.
The Mail & Guardian spoke to Mamongae Mahlare, the chief executive of Takealot Group, about its role in e-commerce, its competition woes and expansion to brick and mortar operations.
Do you think Takealot has reached its plateau in South Africa?
I don’t think we have even scratched the surface when it comes to the potential of e-commerce. Takealot is 11 years old, so it’s still all very new. I say that there is still vast potential simply because when you think of e-commerce penetration you have to think about it as a percentage of retail. As we sit today, e-commerce in this country sits just under 4% of total retail, so that gives you a sense of the infancy of e-commerce.
When you even think of penetration across the country, historically, like most new things, they tend to evolve in metros, in urban areas. And so what we saw accelerated by Covid-19 is the evolution of adoption in more peri-urban, rural areas and townships. This tells you that there is potential for e-commerce to be used by many more people than are currently using it. I certainly believe there is much more potential for e-commerce and the value of it for South Africans is transferable across income levels.
Takealotowns 4% of total online retail. Why is the growth slow?
In 2018 we were talking less than 2% and now we’re at 4%. What you’re seeing is that there is progression but the early years of developing a new sector are always going to be high investment and can take a long time to gain momentum. You’re introducing something that does not exist .Now we are seeing that demand accelerate. The more people are interacting with e-commerce options across multiple businesses whether they are buying from us or buying from elsewhere it starts to make people feel more comfortable with just the concept of actually buying online.
The big barrier is always that first transaction. And that’s why we are also excited about the grocery offer on Mr D because everybody needs groceries in a day and you also have a short window, an hour, to see if your groceries actually arrive. We are building towards making sure that the usage of the services is democratised because that’s what’s going to accelerate it, making sure that it is available where people are.
Is Takealot receptive to new players coming into the market? Do you think Amazon is going to disrupt your business?
We welcome the arrival of global competitors. A business like Takealot has built a business case for them [Amazon] to come to South Africa because they are now starting to see that there is a viable market and a viable opportunity. You must remember that e-commerce is an extremely competitive sector because we are part of retail.
As it stands, everyday I am not just competing with another online player, I am competing with all of the other retailers. Competition is not new to us. Obviously this is now an external player coming in and that will bring with it nuances that we can expect.
Takealot has been identified as a bully by the Competition Commission. What is your response to this?
It is important that we define the market as retail, because that is what we are. And so when you think about that 4% of online retail, we are about 2% of total retail. I do not know in any context where 2% is a giant. If you look at our practices and how we engage, we are far from being able to be a bully because you need market power to be a bully. If I come with my 2% and the rest of retail comes with their 98%, who’s got the buying power here?
When you look at the number of sellers that we have on our platform, a few years ago we started with 120 sellers in 2016, we are sitting at over 8 000 today. That is testament to the fact that we have a business model and environment that has enabled and empowered SMEs [small to medium enterprises] to be established and grow on our platform which continue to be a significant part of our business.
Everything in e-commerce is completely transparent. I think what we would need is evidence that says we are all of those things [dishonest and predatory conduct]. All the evidence we see is that our conduct is always very positive and strong.
Seeing that you see yourself as part of the broader retail industry, would Takealot expand to brick and mortar?
You can never really close the door to some of these opportunities. At the moment we still strongly believe that there is vast investment still to be made in the online offering. It stretches us to be innovative. We don’t want to start from being an e-commerce player and then become just like everyone else.
You have been at the helm for a year now, how has it been?
It was a year at the end of September and one of the things that was really surprising about this platform was the extent to which it is such a powerful model for inclusive growth. The only way for Takealot to grow is for the SMEs on our platform to grow, which means that when Takealot doubles in size, we would have doubled the number of entrepreneurs on our platform and the number of local businesses that are supported by Superbalist and Mr D. That means that we have what I would call real economic transformation.
And the second thing that surprised me, or that is really great to see, is the servicing of all South Africans with the same quality service regardless of whether you are in Sandton or in Lusikisiki. When you think about how it transforms access to retail to me that is a powerful component that was quite encouraging and it was an unexpected positive surprise.
We are a retail business, we are a supply chain business and we are also a technology business. So, I am excited about the business and I am excited about all our different businesses in terms of the service they are able to bring toSouth African consumers.
I believe that if the Competition Commission allows for the sector to continue growing unconstrained we’ll be able to achieve far more with the sector in creating jobs because our ecosystem has been able to create 33 000 [indirect] jobs in 10 years. The power of this model to drive growth in our economy and drive the transformation so that the money goes to many more hands is unparalleled.
