• Takealot increased its revenue by 41% in the six months to the end of September to R3.7 billion.
  • This was despite the severe restrictions on online selling during the first phase of lockdown.
  • Although ahead of its peers when it comes to the online shopping experience, Takealot can compete better on price, an analyst says.
  • For more stories, visit www.businessinsider.co.za.

South Africa’s largest online retailer Takealot saw a surge in online buying during the past few months, despite being restricted from trading fully during the hard lockdown months.

Online trading was restricted to essential goods during the first stage of lockdown, and its online food delivery Mr D, and fashion platform Superbalist could not do business at all. 

But once the restrictions were lifted, demand for online buying leapt, which saw the Takealot group's half-year revenue surge by 41% to $238 million or R3.7 billion, Naspers reported as part of its interim results on Monday. Naspers owns a controlling stake in Takealot.

In rand, the Takealot.com platform grew the total value of merchandise sold (including from third-party sellers) by 88% during the six months  and Mr D - despite not being able to do business for weeks - saw its total sales more than double (+101%). Superbalist sales grew by 37% in rand.

“Given this strong topline performance, Takealot delivered a trading loss improvement of 36% (27%), despite significant one-time pandemic-related investments,” Naspers said.

Across the world, consumers shifted their spending online as lockdowns and the fear of contracting Covid-19 discouraged them from going to shops. 

“Covid just accelerated the process for consumers to shop online," says Casparus Treurnicht, portfolio manager at Gryphon Asset Management. "If you weren’t aiming to get your business 'digital ready' over the past few years, it might’ve been the reason why it's experienced hardship over the last few months,” he said.

Takealot’s goal has always been to offer consumers the ability to shop for all their needs on its platform, says Treurnicht, who adds that the huge amounts of investments it has made over the last few years are now bearing fruit. 

“Takealot tried to get as much merchandise possible on its 'virtual' shelves. It is now stocking goods via multiple avenues. If they don’t stock it, you can get it from other shops on the Takealot platform."

Takealot has been in business for less than a decade, but has succeeded to grab significant market share from Massmart, owner of Makro and Game, which has struggled to compete online. It has since tried to fight bac, investing heavily on online retailing as well as streamlining its distribution.

But, Treurnicht reckons that Massmart can still do more.  

“Massmart will need to up their online experience and distribution. Takealot invested massive amounts and they are miles ahead,” he said.  

But while Takelot’s shopping experience is better than most competitors, it can do more on pricing, Treurnicht believes. 

Pricing strategy will be key going forward, given the ease with which customers can compare prices. “I think they [Takealot] can do better here,” he said.

Business Insider SA is part of 24.com, which is in the Naspers-owned Media24 stable.

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