Big problem coming for Takealot merchants
[ad_1]
Merchants who exclusively sell through Takealot are potentially missing out on a significant number of sales as competition among South Africa’s e-commerce marketplaces heats up.
While Takealot makes up most of the web traffic and online sales volume among South African online marketplaces, estimates place these at 50% to 60% of the total market.
With Amazon launching its South African marketplace earlier this year, this market fragmentation looks set to increase.
MyBroadband spoke to local e-commerce automation startup Wherehouse about the trends they are seeing in the market.
Launched in January 2022 by Giovanni Joubert, Wherehouse integrates with multiple third-party marketplaces and e-commerce platforms such as Shopify and WooCommerce.
This gives Wherehouse some insight into sales volumes among merchants who list on a single platform like Takealot compared to those who sell in multiple locations.
“Market fragmentation is not unique to South Africa. Even in the US, while Amazon holds a significant market share, savvy shoppers can find better deals by exploring multiple marketplaces,” Joubert said.
He said sellers often list their products on multiple marketplaces, with each platform investing in marketing and search ads that provide sellers with additional visibility for their products.
“Some marketplaces impose fewer fees on sellers, while others offer additional services that benefit the merchants,” explained Joubert.
“Further, sellers choose to diversify incase of emergency. For example, if Takealot were to stop selling my goods, I’d still want buyers to be able to find them.”
According to Wherehouse’s website, they’ve seen some sellers increase their turnover by 50% after listing their products on multiple platforms.
“We see a clear increase in sales when a seller expands from one to multiple marketplaces. Therefore, I believe this fragmentation will continue,” Joubert told MyBroadband.
“From the buyer’s perspective, you just need to be a bit savvy and do your homework. By doing so, you can benefit from the various marketplaces competing for market share and grab a good deal.”
Asked if they could share statistics on sales volumes across marketplaces, Joubert obliged with two sets of figures for the three months from April to June 2024.
The first set looked across all their customer accounts that integrate marketplaces.
However, Joubert noted that this included merchants who only sell through Takealot and others who don’t have their own store through Shopify, WooCommerce, or another platform.
Overall, Takealot comprised 75.9% of sales volumes among their clients. Own stores made up 12%, and Makro 7.6%.
There is a sharp drop after this, with Bob Shop making up 1.6% of sales, and Amazon taking up 1.09% of volumes. Loot and Leroy Merlin make up less than 1% of total volumes each.
This picture changes drastically when only considering merchants who sell through three or more platforms.
Those sales volumes are summarised in the table below. Joubert said they may have more sellers in some product categories (e.g. electronics) than others (e.g. kids toys).
| Merchants on Wherehouse selling through 3+ platforms (April–June 2024) | |
|---|---|
| Marketplace | Sales volume |
| takealot.com | 54.37% |
| makro.co.za | 17.20% |
| Seller’s own store (Shopify, WooCommerce, etc.) | 15.00% |
| amazon.co.za | 10.25% |
| leroymerlin.co.za | 1.85% |
| loot.co.za | 0.68% |
| bobshop.co.za | 0.65% |
A South African technology startup
We also spoke to Joubert about his company and the technology he used to build Wherehouse.
“The very first line of code was committed on 10 May 2021, and the first customer subscribed on 5 January 2022,” he said.
Joubert said he’s always dabbled with some sort of entrepreneurial venture, whether he was 13 years old and fixing iPhones out of his parents’ garage or doing videography for companies and building websites.
“Being a software developer, I was looking for business problems to solve that I could turn into a software-based solution,” he said.
Among his many ideas, a service to help sellers automate managing listings across multiple e-commerce marketplaces grabbed his attention the most.
“As a freelancer, I built an e-commerce website for a brick-and-mortar retailer who reached out to find out whether I thought it would be possible to also list their products on Takealot,” said Joubert.
“Soon after, they were also looking at listing on Makro marketplace.”
Joubert said a friend of his had launched an online store (Pro-Outdoor) that completely exceeded expectations.
“He quickly came to realise that accounting automation would be required to keep up with the requirements of retail.”
While researching the viability of a service like Wherehouse, Joubert said he started asking questions on various Facebook interest groups related to marketplace selling to gauge interest and see what problems sellers faced.
“The amount of buzz on these made me realise I was on to something,” said Joubert.
Regarding his technology stack, Joubert said it is quite modern, as he had the flexibility to build with the libraries and languages that were most enjoyable to him at the time.
Wherehouse is built on Node.js for the backend, Vue.js for the frontend, PostgreSQL for the database, and Redis for queueing and real-time systems.
He built their website in Nuxt. Joubert said he uses typescript for Node, Vue, and Nuxt.
Asked which products and platforms were easiest to integrate, Joubert said the easiest were those that took an API-first approach.
“Systems like Xero accounting and Shopify have clear API documentation and error handling,” he said.
“You can clearly see they are market leaders and employ fantastic developer teams.”
In the second tier were platforms that provided an official, documented API, but had added it after the fact.
Takealot sits somewhere between first-class and second-tier, as its API works well and is well documented, but it was clearly added after their core systems were built.
“Some things are very cumbersome or inflexible compared to platforms like Shopify,” Joubert said. “I’m looking at you, date range and status filters.”
Below the second tier are systems that haven’t migrated their API over to REST or JSON yet.
“You’d be surprised to see this one on the list, but Amazon fits in here,” Joubert said.
“Many things are still happening over XML and file uploads. If it isn’t broken don’t fix it, I assume.”
Asked how much of a headache Makro’s recent platform migration was for him, Joubert said the technical changes were not as big a problem as the communication and data migration mishaps.
“This affects the sellers more than myself but was saddening to see,” said Joubert.
“Some sellers making really fantastic sales one day and the next all of their listings are disabled and missing.”
Joubert said Wherehouse is mostly back in business from an integration perspective and said he was optimistic about Makro’s future plans as a marketplace.
[ad_2]