Superbalist has been forced to increase its Google online advertising by 200% since Tem and Shane expanded into South Africa.
Take-a-lot Group is stepping up investment in online fashion retailer Superbalist as it revamps its business model amid growing competition from Chinese multinational online retailers.
When you are charged South Africa's largest online clothing store, SuperbalistThe .com has been performing badly for years, with the retailer posting a 7% increase in total merchant value (GMV) in its annual financial report released last month.
While South Africa's online retail industry has experienced impressive growth, reaching R71 billion in sales in 2023, local e-commerce operators are struggling to maintain the peak levels reached at the height of the pandemic.
A further challenge facing the industry in recent years has been the rise of new online retailers that are shaking up the South African market with low-cost products, mainly manufactured in China, and free shipping.
These include Temu, Shein, Amazon, Wish, Made-in-China, Sunsky, and others.
Take-a-lot Group CEO Frederick Zietzman revealed at a recent media briefing in Cape Town that the group is looking to optimise growth and focus on further innovating the Superbalist business model to make its online platform more competitive.
“Retail is a tough environment. We have moved from the COVID pandemic into a period of extremely depressed consumer conditions,” Zietzman said.
“To be honest, Superbalist had a tough year last year. We were in the middle of the storm when Shein launched nationally. And like any clothing retailer, it will be a battle. We have introduced several initiatives and interventions that we believe are necessary. Any business has to redesign and re-evolve when faced with realities that require change.”
“And I think that reality has been the big change brought about by overseas online platforms, especially Shein. What we're thinking about now is how to differentiate Superbalist's products and how to transform them from our own brand. To do that, we need to work on a few things.”
Frederic Zietzmann, CEO of Takealot Group.
Naspers-owned Take-A-Lot Group (comprising Takealot.com, Mr D Food and Superbalist) has achieved profitability for the first time in its financial year 2024, posting an operating 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 capital injection.
In August 2023, Takealot Group announced that Superbalist.com was entering into a Chapter 189 proceeding leading to a business restructuring. This restructuring and changes affected several jobs within the company.
Zietzman said that although the online fashion apparel retailer is Take-A-Lot's worst-performing business, the company has no plans to sell the business as there is still significant growth potential.
“Superbalist is in a different cycle to take-a-lot.com and Mr D and we need to think about repositioning our product offering and adding value. We are increasing our investment in our online business and Naspers shareholders are supporting us. They understand the fact that there is a competitive threat and we are investing to address that.”
“If you compare life before Tem to life now after Tem, we've had to increase our Google online advertising by 200%.”
Temu, which debuted domestically in January, has more than 350 million app users worldwide and was the most downloaded app in the first quarter of 2024. According to research firm Statista, the app was downloaded more than 41 million times worldwide in March alone, making it more popular than Amazon's Marketplace app.
According to Reuters, SHEIN has grown into a global e-commerce giant, estimated to generate more than $30 billion in sales from January to December 2023. The company operates in more than 150 countries and has relocated its headquarters from China to Singapore.
Local e-retailers and manufacturers have been complaining over the past six months about alleged anti-competitive practices by Chinese multinational e-commerce disruptors Shein and Temu, but the companies deny the charges.
ITWeb has previously reported on frustration felt by local online retailers, who blame global sites for offering unfairly cheap prices, with some saying their sales have fallen by nearly 30% since Temu made its South African debut earlier this year.
In its annual report, Take-a-lot Group expressed concern that the rise of low-cost, Chinese-made online fashion and general merchandise retailers that compete directly with local retailers such as Superbalist.com and Fossini Group could have a long-term impact on the country's economic growth.
Furthermore, the online retail giant said regulatory loopholes and outdated regulations in South Africa's e-commerce sector have created an enabling environment for global e-commerce players to exploit tax loopholes.
Zietzman noted that as part of its plans to compete against the competition, the group is looking to invest in improving infrastructure.
“Given the competition, you have to be smart about where you build capital and where you just spend money. There has been a lot of information sharing among the heads of each division of Take-a-lot Group to discuss how the company will tackle the fundamentals of expanding its online platform.
“This includes adapting to scale and adding new features. There is a lot to learn and room for improvement. The world is a global stage and, to be honest, at this stage we are competing with imported technology. The code base (software) that supports Amazon, Walmart and Temu was not written by South Africans, it is technology that crosses borders so we need to make sure we are always learning from the best.”
As a first step towards creating a balanced, inclusive and competitive online market in South Africa, the South African Revenue Service has committed to taxing small quantities (less than R500) of clothing goods and purchased from international online retailers at the same rate as large quantities (more than R500) from July 1. Such purchases are subject to a 45% import duty plus VAT.
