Takealot Bets on Townships to Combat Global E-Commerce Competition

South Africa's dominant e-commerce retailer, Takealot, is employing a personal shopper strategy to expand into townships and rural areas, aiming to counter growing competition from international rivals, reports Reuters.

The move comes as global companies like Amazon, Temu, and Shein have entered South Africa's price-sensitive e-commerce market, increasing competition and driving up operating costs.

"You can't argue that they had an impact on the overall retail environment," Frederik Zietsman, Takealot Group CEO, told Reuters, referencing the Chinese players and Amazon. "I think more dramatically, the cost of doing business has gone up significantly."

South Africa is seen as a key gateway to expanding across the continent due to its higher mobile internet and smartphone penetration, and the increasing popularity of buy now, pay later services.

Despite this favorable landscape, Takealot's growth has been constrained by a weak economic climate and the influx of global competitors. In the first half of 2023, Takealot.com's gross merchandise value growth slowed to 10%, down from 15% in the same period last year.

To counter these challenges and reach new customer bases, Takealot is recruiting personal shoppers to serve underbanked and often non-tech-savvy customers in townships and rural areas.

"The targeted areas were 'where our insights showed us that e-commerce is struggling to get traction'," Zietsman explained.

The initiative has already seen the recruitment of approximately 2,500 personal shoppers, with a target of 5,000 by 2028.

"The personal shopper brings more drivers, the more drivers there are, the more need you've got for a franchisee and then you establish the franchisee, then you create the ecosystem," Zietsman said.

Takealot is also expanding its network of "dark stores" – facilities solely dedicated to fulfilling online orders. The company currently operates four such stores and plans to increase this number in the next year.

In addition to its personal shopper program, Takealot is investing in automation at its distribution centers. In October, the company launched 54 robotic machines in Johannesburg to handle large items, and has increased automation at its Cape Town facility to handle a higher volume of parcels.

"Those robots basically help us to scale quicker in that they can sort quicker. They can take a lot of incremental load within the physical facility," Zietsman added.