South Africa’s Top E-Tailer Takealot Takes A Rough Tumble
In its recently released financial data for the year ended March 31, 2023, Takealot Group, a leading player in South Africa’s e-commerce market, revealed a substantial loss of USD 22 M. This figure is significantly higher than the USD 7 M loss reported in the previous year.
The parent company of Takealot, Naspers, disclosed in its latest results that the group managed to achieve modest growth in its local currency, the rand. Takealot recorded a 13 percent increase in gross merchandise value (GMV) and a 12 percent rise in revenue. However, despite these positive indicators, the widening loss signals underlying challenges within the company.
Takealot Group encompasses three main operating units: Takealot.com, Superbalist, and Mr D. An examination of their individual performances provides insights into the overall financial situation.
Takealot.com, considered the largest e-commerce platform in South Africa, experienced a 14 percent year-on-year growth in GMV, denominated in local currency. Superbalist, a popular online fashion destination, achieved an 11 percent revenue growth in the same currency. Meanwhile, Mr D, the group’s on-demand business, saw GMV increase by 8 percent and revenue rise by 17 percent.
Despite these growth figures, Takealot’s USD 22 M loss resulted in a trading margin decline of 3 percent. Naspers attributed this negative trend to slowing consumer demand in the face of rising inflation and interest rates in South Africa. Additionally, operational costs weighed heavily on profitability due to persistent power outages, escalating fuel prices, and global supply-chain disruptions.
The financial trajectory of Takealot raises concerns about the company’s ability to curtail costs and achieve profitability, a lingering question mark hovering over e-commerce players in Africa. Similar challenges bedevilling the continent’s leading e-tailer Jumia are an extensively covered topic..
Former Takealot CEO Kim Reid had previously stated that Takealot was on track to become profitable in 2021. The company had made significant strides in reducing losses between 2019 and 2021, inspiring market confidence in its profitability prospects for the 2022 fiscal year. However, the recent widening of losses signifies a deviation from the anticipated positive trajectory.
Of particular concern is the deceleration of Takealot’s growth over the past two years, both in US dollars and in rands. All three units—Takealot.com, Superbalist, and Mr D—have experienced a notable decline in GMV growth. This slower growth trajectory raises doubts about whether Takealot has reached the end of its rapid growth phase while still grappling with cost containment challenges.
To reverse its financial fortunes and achieve profitability, Takealot would be keen on increasing margins, reducing costs, and enhancing operational efficiency. Unfortunately, current trends suggest a contrary direction.
As Takealot Group faces mounting challenges in navigating the evolving e-commerce landscape, its ability to implement effective strategies to contain costs and generate sustainable profits will be crucial for its future success.
Featured Image Credits: News24
