Superbalist seeks rebirth amid rivalry between Temu and Shein

Takealot Group is increasing investment in its online clothing retailer Superbalist as it revamps its business model amid growing competition from Chinese international e-tailers.

Once settled between The largest online clothing stores in South Africa, SuperballistThe .com domain has seen a significant decline in performance over the years, as evidenced by a 7 percent increase in gross seller value (GMV) in its annual financial results released last month.

While South Africa’s online sales have seen significant growth, reaching a turnover of R71 billion in 2023, local e-commerce players are struggling to maintain the peak levels achieved during the height of the pandemic.

An additional challenge the sector has had to face in recent years is the growing number of new online retailers entering the local market, who are causing a stir in South Africa by offering cheap products, mainly manufactured in China, and free shipping.

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

In a recent press conference in Cape Town, Takealot Group CEO Frederik Zietsman revealed that the group intends to optimise growth to increase the competitiveness of its online platforms, with a focus on further innovation of the Superbalist business model.

“Retail is a tough environment; we’ve gone from COVID to a very depressing consumer environment,” Zietsman commented.

“To be honest, Superbalist had a tough year last fiscal. It was at the height of the storm when Shein came to the country. And like any other fashion retailer, it will be a struggle. We have put in place certain initiatives and interventions that we believe are necessary. Every business has to reinvent itself and change itself when the realities around it demand change.

“And I think the reality around that has been a huge shift driven by offshore online platforms, especially Shein. Now we’re thinking about how to differentiate the Superbalist offering and transform ourselves from an in-house brand – and there are a few things that need to come into play.”

Naspers’ Takealot Group – which includes Takealot.com, Mr D Food and Superbalist – turned profitable for the first time in fiscal 2024, posting trading profits 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 that Superbalist.com was starting a Section 189 process that would lead to a restructuring of the company. The restructuring and changes affected several positions within the company.

According to Zietsman, even though the online fashion retailer was the worst performer in the Takealot Group, the company has no plans to sell the business because it still has strong growth potential.

“Superbalist is in a different cycle to Takealot.com and Mr D, and we need to think about possibly repositioning the product offering and think about some of the added value we can bring. We are increasing our investment in online businesses and our shareholder Naspers is supporting us; they understand the fact that there is a competitive threat and we are investing against that.

“If we compare life before This with life after This today, we have had to increase the number of online ads on Google by 200%.”

Temu, which debuted locally in January, has more than 350 million app users worldwide and was the most downloaded app in the first quarter of 2024. In March alone, the app was downloaded more than 41 million times worldwide, making it more popular than the Amazon Marketplace app, according to research firm Statista.

Shein has become a global e-commerce giant, with sales expected to exceed $30 billion between January and December 2023, according to Reuters. It operates in more than 150 countries and has moved its headquarters from China to Singapore.

Local retailers and the manufacturing sector have complained over the past six months about alleged anti-competitive practices by Chinese multinational e-commerce disruptors Shein and Temu, but they have denied the accusations.

ITWeb has previously reported on the frustration of local online retailers who have accused global websites of offering unjustifiably low prices, with some claiming that sales have fallen by almost 30% since the start of the year when Temu debuted in South Africa.

In its annual report, Takealot Group raised concerns about the long-term repercussions on the country’s economic growth of the rise of Chinese online retailers offering cheap clothing and consumer goods that directly compete with local retailers such as Superbalist.com and Foschini Group.

The online retail giant further stated that legal loopholes and outdated regulations in the e-commerce sector in South Africa have created a favourable environment for global e-commerce players to exploit tax loopholes.

Zietsman stressed that as part of its plans to combat competition, the group is considering investing in infrastructure improvements.

“In the face of competition, we have to be smart about where we build capital and where we just spend money. There have been a number of exchanges between Takealot Group unit leaders discussing how the company will tackle the basics of scaling an online platform.

“That 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 honestly, at this stage we are competing with imported technology because the code base (software) that powers Amazon, Walmart and Temu was not written by South Africans and this is technology that is pushing boundaries and we need to make sure we are constantly learning from the best.”

In a first step by the South African Revenue Service in creating a sustainable, inclusive and competitive online marketplace in SA, the taxman has committed to taxing internationally manufactured clothing items purchased from international online retailers, in small quantities (under R500) at the same rate as large quantities (R500 and above), from 1 July. Such purchases will be subject to an import duty of 45% plus VAT.