How Takealot Became SA’s Best Online Retailer
Takealot is the country’s largest e-commerce retailer, and just recently it was voted the best online shop in South Africa. It took the top spot in the 2017 MyBroadband Online Shopping Survey.
According to the publication, over half (57.34%) of the 1,915 people surveyed – which included IT professionals and tech-savvy individuals – chose the company as the best online shop in SA.
The etailer was also named the most popular store, with 78.80% of the respondents indicating that they used the online shop this year.
The brand is a part of the Takealot Online Group which has experienced “robust growth” since its merger with Kalahari in 2014. Also in the stable of brands are Superbalist.com, the fashion etailer, Mr D Food, South Africa’s largest restaurant food delivery service, and Mr D Courier, its point to point courier service.
What can your startup learn from how Takealot does business? – Learn from these 8 strategies that are behind the etailer’s success.
1. Make The Most Of Investments
In April this year, Naspers announced a R960 million cash injection into Takealot.com, which followed a R716 million investment in 2015. The group has sought to use the investments to propel it faster towards profitability, according to BusinessTech.
Naspers CFO, Basil Sgourdos told the publication that they expect the online shop to accelerate revenue growth as well as improvement in new unit economics in the future.
The company turned over R2.3 billion in the year to February, and has been growing at a compound rate of 107% for the last four years, according to the BusinessTech article.
Although the seven-year-old company is not yet profitable, CEO of Takealot, Kim Reid, said they are using the investments to scale the business, which will allow them to become profitable and so investment will be made into people, technology and processes.
“Once you have reached scale, as Amazon has, profits come fast. But building scale requires funds,” he said.
“We believe in the Takealot brand and the Naspers investment will also help us to increase brand recognition and marketing,” Reid said.
Attracting more users and making more sales increasingly offsets high fixed overheads, and profitability increases, Reid said in the Fin24 article.
“In this type of business, scale is everything,” he said, “Our models are well-established, but these businesses need cash to scale. We are not trying to build a small retailer. We are investing in our platform and in attracting new users.”
<p2. Be Where Your Market Is
On the question of growing Takealot beyond South Africa’s borders, geographically speaking, </pReid told Fin24 that Takealot will be staying put as it still sees a lot of room to grow in the local e-commerce market.
According to the article, Reid said increasing mobile access has led to greater ability to unlock the potential of e-commerce in the country.
Julie-Anne Walsh‚ head of marketing at Takealot‚ told Business Live that the penetration of e-commerce in SA is only about 1% of the total retail market. “In the US and China it is 13% and 15%‚ respectively. She said that although no one knows what the potential ceiling is for SA’s e-commerce activity‚ the gap between SA’s market and that in other countries presents an opportunity for many businesses.”
3. Become Globally Competitive By Focusing On Your Strengths
By focussing on its competitive advantages, Takealot is able to compete with global competitors including brands such as H&M and Cotton On, Reid said in the Fin24 article.
“There are challenges with ordering globally. Many people order on global sites and do not receive their goods, or they do not have the option to return items. Goods from global retailers can take a long time to arrive and customers may incur unexpected charges. We believe you need to be in the country – in control of delivery and of customer satisfaction,” Reid says.
4. Give The Best Customer Service and Added Extras
Although e-commerce in South Africa stands at around 1%, the potential for growth is expected to grow dramatically. However, one of the challenges lie in improving customer experiences for e-commerce to really take off and Takealot has placed great emphasis on this aspect of their business, says Reid in a Fin24 article.
“For customers the positive aspects of e-commerce include being able to compare prices online, receiving good service and having items delivered to your door – that is apart from saving time, a scarce commodity these days,” said Reid.
Takealot is also using specials and vouchers to bolster their customer numbers, Reid said in an article on MyBroadband.
5. Bend With The Market
Understanding your market and being able to adapt can be a competitive advantage. This has been another area of focus for Takealot.
SA remains slightly behind the curve when it comes to e-commerce, says Reid in the Fin24 article, and this has enabled the company to learn from the experience of global companies like Amazon.
“There are also differences between online retail in different regions. Our traffic is predominantly mobile traffic and conversion is very different, so how you develop the product itself is important.”
An e-commerce expert adds in a MyBroadband article that Takealot will have to evolve to compete effectively in the South African market. This includes building an inclusive marketplace, and following the lead of companies like Amazon and eBay.
6. The Team Is Your Make-Or-Break So Choose Wisely
Team and culture have been critical ingredients in Takealot’s success, says Reid. An accountant by training, Reid told Moneyweb that he formulated a set of values early in the business and these values continue to form the basis of Takealot’s culture. These values include “being faster in getting things done” with dedicated team players on board.
Reid says this has also informed his hiring strategy.
“The people with the best people will win – they need to be smart, hungry and must have integrity, and they need to be builders who want to achieve something and want to get something out of their job.”
Reid told the publication that he employs according to the Warren Buffett philosophy: “Integrity, intelligence, and energy – and not two out of three traits, three out of three” and describes his ideal employees as “people with low ego and high energy”, he says.
Adding to the culture in the company, Reid says that the company continues to be managed through a flat structure, and no one has offices.
See also: BidorBuy Founder On Why SA’s E-Commerce Gold-Rush Is Still To Come, And How To Prepare For It
7. Play The Long-Game
Long-term goals over short-term gains, this has been Takealot’s approach. According to MyBroadband, Takealot is a “long play” for investors.
An industry expert told the publication that Takealot investors should not expect to see any returns in the medium term, but that a dominant position in the South African market can pay off in the long term.
8. Always Look To Improve
Takealot is constantly re-engineering its processes, like picking, packing and improving delivery times to reduce costs and improve customer service. “E-commerce is a tough business – we deal with every part of the value chain, including the consumers,” says Reid in the Moneyweb article.
According to MyBroadband, Takelot is currently burning through millions of rands per month to support its high operating costs, large staff complement, and aggressive marketing and customer acquisition initiatives.