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While globalisation marches forward, a trend is emerging: great local companies are winning out over their multinational competitors. A recent MIT Sloan Management Review article noted that this trend was especially true in emerging markets, where multinationals were assumed to enjoy superiority. Former Unilever CEO Paul Polman famously pointed out that his stiffest competition comes not from Procter & Gamble but from fast-growing local players. South Africa is considered an emerging market, but the question is: are local firms outdoing their international rivals?Two years ago, when Amazon entered South Africa, commentators predicted the demise of local online retailers. However, at the time, I warned that Amazon needed to be careful because South Africa was a complex market. I suggested that Amazon needed to learn from Walmart, the US retailer that began its journey into South Africa with the acquisition of Massmart in 2023. Last November, Walmart South Africa opened its first shop in the country. Some locals are already cynically referring to Walmart’s new shops as “Shoprite-lite”.So far, Amazon hasn’t yet threatened the survival of Takealot Group. Interestingly, this week the Naspers-Prosus-owned e-commerce giant reported its first full-year operating profit — R180m, signalling its ability to withstand the onslaught of global giants. Revenue rose to R17bn.Takealot Group has more than 18,000 third-party sellers who contribute 62% of its total gross merchandise value, making them a vital pillar. It could consider launching zero- or low-commission pilot programmes for specific categories such as fashion or for smaller sellers“We’ve studied enough global scenarios to realise that with the launch of Amazon Prime, it’s not the end of the game, it’s the start of the game,” Takealot Group CEO Frederik Zietsman told journalists.With profitability secured to provide the fuel for future investments, Takealot Group’s cash-flush parent company must plough more capital into the e-tailer to make it even more competitive. Facing sustained pressure from global giants, Takealot needs to bulk up. It is fortunate to be majority-owned by Naspers through its global internet subsidiary Prosus, which is invested in numerous e-commerce platforms. The proven strategies of these “sister companies” provide it with a ready-made blueprint for success.Takealot Group can learn from Naspers’ Swiggy by leveraging Mr D’s delivery network and existing data to pilot “dark stores” in high-density urban areas. This would expand Mr D’s services beyond food to other high-frequency categories including daily groceries, building a solid defence against local instant-delivery competitors such as Checkers Sixty60. Takealot Group must remain mindful of the profitability challenges associated with this model.Meesho, an Indian e-commerce platform also owned by Prosus, offers another lesson that Takealot Group could learn. Meesho’s core strategy involves activating overlooked sellers and price-sensitive buyers through a “zero-commission” model. While Meesho charges zero platform commissions to sellers, it relies on monetising value-added services such as advertising, logistics and working capital loans. This has helped it attract more than 700,000 active sellers.Takealot Group has more than 18,000 third-party sellers who contribute 62% of its total gross merchandise value, making them a vital pillar. It could consider launching zero- or low-commission pilot programmes for specific categories such as fashion or for smaller sellers. Takealot Group has already taken a solid first step. It should not fight in isolation, but fully leverage its unique advantage as a member of the Naspers and Prosus family and learn from China’s Douyin and PinduoduoWhile this might hurt revenue in the short term, it would significantly lower the barrier to entry, rapidly expand product inventory, and attract local small businesses that have up to now been hesitant due to cost concerns.Now, what about lessons from China?The Takealot Group is currently a traditional “shelf-based” platform. It could learn from Douyin, which integrates products into short videos and live streams, using algorithmic recommendations to spark users’ latent purchasing desires. Introducing livestream shopping or short video features would allow sellers to demonstrate products more vividly, which is especially effective to boost sales of high-ticket items. Takealot Group could also borrow from Pinduoduo’s playbook on social virality. Pinduoduo pioneered the social-group-buying model, leveraging social relationships on platforms such as WeChat. Users are incentivised to share products and invite friends to join purchases for lower prices, driving rapid user growth. South Africa has a vibrant social media landscape. Takealot Group could introduce “group-buy” or “friend-invitation” mechanics to acquire customers at a lower cost and tap into more price-sensitive consumer segments.Takealot Group has already taken a solid first step. It should not fight in isolation, but fully leverage its unique advantage as a member of the Naspers and Prosus family and learn from China’s Douyin and Pinduoduo.Despite these possibilities, Prosus remains cautious.Naspers’s goodwill carried against the Takealot Group cash-generating unit stood at just $51m (R835m), and in valuing the business, Naspers applied post-tax discount rates of between 17% and 21% — at the higher end of the group’s range, reflecting uncertainty in its forecasts. This caution is a good thing and must not be mistaken for lack of confidence, as global players may still compete aggressively.
