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Superbalist eyes reinvention amid Temu, Shein competition

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 08 Jul 2024
Superbalist has been forced to increase its Google online advertising by 200% since the arrival of Temu and Shein in SA.
Superbalist has been forced to increase its Google online advertising by 200% since the arrival of Temu and Shein in SA.

Takealot Group is boosting investment in its online fashion retailer Superbalist, to modify its business model amid rising competition from Chinese multinational e-tailers.

Once billed among South Africa’s biggest online clothing stores, Superbalist.com has taken a huge knock in performance over the years, with the retailer posting 7% gross merchant value (GMV) growth in its annual financial results released last month.

While online retail in SA has witnessed a remarkable ramp-up, reaching R71 billion turnover in 2023, local e-commerce players have been struggling to maintain the peak levels reached during the height of the pandemic.

An additional challenge facing the sector in recent years is the rise of new online retailers entering the local market, shaking up the South African landscape with low-cost products manufactured mostly in China, and free shipping.

These include Temu, Shein, Amazon, Wish, Made-in-China and Sunsky, among others.

Speaking during a recent media briefing in Cape Town, Takealot Group CEO Frederik Zietsman revealed the group is looking at optimising growth to boost competitiveness for its online platforms, with a focus on further innovating Superbalist’s business model.

“Retail is a tough environment to be in; we went from COVID times to a super-depressed consumer environment,” commented Zietsman.

“Superbalist has seen a difficult year over the last financial year, to be honest. It was at the height of the storm when Shein came into the country. And, as with any other clothing retailer, that is going to be a battle. We've introduced some initiatives and interventions that we believe are required. Any business needs to redesign and re-evolve itself when there are realities around it that require change.

“And I think the reality around that was the big change brought about by the offshore online platforms, specifically Shein. The thinking now is around how do we differentiate Superbalist’s offerings and transform from being an in-house brand – and there are a couple of things that need to come into play.”

Frederik Zietsman, Takealot Group CEO.
Frederik Zietsman, Takealot Group CEO.

Naspers-owned Takealot Group − which comprises Takealot.com, Mr D Food and Superbalist − reached profitability for the first time, as of the 2024 financial year, with a trading profit of $3 million.

Originally known as Citymob, Superbalist was founded in 2013 by entrepreneurs Luke Jedeikin, Claude Hanan and Daniel Solomon.

The group acquired Superbalist in August 2014 after Naspers received a $100 million funding injection.

In August 2023, Takealot Group announced Superbalist.com was embarking on a Section 189 process, which will lead to the restructuring of the business. The restructuring and changes impacted several jobs within the company.

According to Zietsman, despite the fashion apparel e-tailer being the worst performer in the Takealot Group stable, the company has no plans to sell off the business, as there is still a lot of growth potential.

“Superbalist is on a different cycle to Takealot.com and Mr D, and we have to think about maybe repositioning the product offering and think about some value-adds that we can bring in. We are increasing investments in the online businesses and our Naspers shareholder is supporting us; they understand the fact that there is a competitor threat and we are investing against that.

“If you think about life pre-Temu versus post-Temu today, we’ve had to increase our Google online advertising by 200%.”

Temu, which made its local debut in January, has over 350 million app users across the globe, and was the most downloaded app in the first quarter of 2024. In March alone, the app was downloaded over 41 million times globally, making it more popular than Amazon’s marketplace app, according to research firm Statista.

Shein has grown into a global e-commerce giant, with sales estimated to exceed $30 billion for the period January to December 2023, according to Reuters. It operates in over 150 countries and has moved its headquarters from China to Singapore.

Local e-tailers and the manufacturing sector have during the past six months complained of alleged anti-competitive practices by Chinese multinational e-commerce disruptors Shein and Temu. However, they have denied the allegations.

ITWeb previously reported on the frustration felt by local online retailers, which accused global online sites of offering unreasonably cheap prices, with some saying their sales have declined by almost 30% from the beginning of the year, when Temu made its debut in SA.

In its annual report, Takealot Group expressed concerns surrounding the long-term repercussions of the rise of low-cost Chinese fashion and general merchandise online retailers, which directly compete with local retailers like Superbalist.com and the Foschini Group – on the country’s economic growth.

The online retail giant further stated that regulatory gaps and outdated regulations in SA’s e-commerce sector created an enabling environment for the exploitation of tax loopholes by these global e-commerce players.

As part of its plans to fend off competition, the group is looking at investing in improving infrastructure, Zietsman pointed out.

“In light of competition, we need to be clever about where we build equity and where we are just spending money. There has been a lot of information-sharing between the heads of Takealot Group units discussing how the company will deal with the fundamentals of scaling an online platform.

“This includes dealing with scale and adding new capabilities. There is a lot of learning and room for improvement. The world is a global stage, and to be honest, at this stage we are competing against imported technology because the code base (software) that supports Amazon, Walmart and Temu is not written by South Africans and it is technology that transcends borders and we need to make sure at all times that we are learning from the best.”

As part of the South African Revenue Service’s first step in creating a balanced, inclusive and competitive online marketplace in SA, the tax collector has, from 1 July, committed to taxing clothing items manufactured internationally and bought from international e-tailers, in small quantities (under R500) at the same rate as large quantities (R500 and above). An import duty of 45% plus VAT will apply to such purchases.

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