Sylvia Duruson
Naspers, the Cape Town-based multinational technology and investment giant, has released its financial results for the fiscal year ending. The report sheds light on the performance of its subsidiary, Takealot Group, a major player in South Africa’s e-commerce sector.
Despite facing a challenging economic environment characterized by high interest rates and inflation, Takealot Group managed to reduce its trading loss to R252 million ($14 million), an improvement from the previous year’s R400 million ($22.2 million) loss. This progress comes amid normalizing consumer behaviour following the pandemic and intense competition in the South African market.
A notable highlight in the report is the first-time profitability achieved by Mr D, Takealot Group’s food delivery and logistics arm. This success stands out against the backdrop of a 2% decline in overall revenue for the Takealot Group, which includes Mr D, the online store Takealot.com, and fashion e-tailer Superbalist. The group’s total revenue for the year stood at R14.9 billion ($792 million).
Naspers acknowledged the increasingly competitive landscape, noting that both local and global competitors have intensified their investments in e-commerce capabilities. The company specifically mentioned the entry of international players like Temu and Shein into the South African market, offering budget-friendly products. The impending arrival of Amazon is expected to further intensify competition.
Despite these challenges, Takealot.com managed to grow its gross merchandise value (GMV) by 3% and reduced its trading losses by R75 million ($4 million). The platform also expanded its marketplace seller base, surpassing 10,000 sellers by March 2024.
Mr D’s performance was particularly impressive, with a 16% increase in GMV and a reported trading profit of R56 million ($3 million). However, Superbalist faced setbacks due to stiff competition from international players.
To address these challenges, Takealot Group focused on improving profitability and enhancing competitiveness during the 2023/24 financial year. The company implemented cost-cutting measures, particularly in areas where expenses had increased due to new warehouses and recruitment in the previous year.
Despite these efforts, Takealot Group’s journey to profitability has been slower than initially anticipated. Former CEO Kim Reid had projected profitability by 2021, following significant loss reductions between 2019 and 2021. However, the company reported a loss of R407 million ($22 million) in 2023, an increase from the R129 million ($7 million) loss in 2022.
As Takealot Group marks its 15th year of operation, it continues to strive for profitability in an increasingly competitive and challenging market. The company’s ability to adapt to changing consumer behaviours, navigate economic pressures, and fend off both local and global competitors will be crucial in determining its future success in South Africa’s dynamic e-commerce landscape.
