Threatening local retail industry! Temu warned by this national e-commerce giant

In the past two years, the potential of South Africa's e-commerce market has continued to grow, and cross-border platforms such as Temu have entered the market one after another, winning the favor of many consumers. However, as the popularity of these platforms soars, some retailers are facing increasing pressure.

Surveys by authoritative agencies show that the confidence of South African retailers has been hit hard by competitors such as Temu.

It is reported that in the first quarter of 2024, the business confidence index of retailers fell again by 1 percentage point to 30%. Among the 2,500 companies surveyed, less than one-third said they were satisfied with the current business conditions, and the remaining more than 60% were dissatisfied or still wait-and-see.

It is predicted that in the second quarter, the index will rise by 5 percentage points to 35%. Although it is slightly higher than the first quarter, the overall sales volume is still very sluggish.

In addition, due to the "challenging market environment", South African online retailer giant Takealot suffered heavy losses in the first three months of this year.

There are also local platforms such as Superbalist and Mr D. However, due to higher product prices than platforms such as Temu and insufficient marketing efforts, they find it difficult to keep up in the fiercely competitive environment.

In response, Takealot issued a warning to competitors such as Temu, accusing them of damaging the interests of local businesses and manufacturers and threatening their employment environment. Takealot also called on relevant departments to formulate regulations to ensure that all e-commerce platforms comply with the same regulations and create a fair competitive environment.

On the one hand, the prices of goods on platforms such as Temu are low, and South African users flock to such platforms to shop. They believe that the prices of goods sold by local retailers are beyond their affordability , and in comparison, they prefer international shopping. This phenomenon has caused domestic platforms to lose most of their consumers.

On the other hand, Takealot pointed out that South African retailers need to pay more than 45% value-added tax when importing clothing, while platforms such as Temu circumvent this regulation by splitting product packaging into small packages, which has put local e-commerce platforms at a disadvantage for a long time.

In its annual performance report, Takealot also stated that if this problem is not resolved, the gap between local retailers and cross-border e-commerce platforms will continue to widen, which will not only undermine South Africa’s sense of sovereignty, but will also be more detrimental to the development of local companies.

In order to create a fairer competitive environment for local retailers, the South African Revenue Service announced a few days ago that from July 1, 2024, all imported clothing packages below 500 rand on platforms such as Temu will be subject to a 45% import tariff and 15% value-added tax .

Industry insiders pointed out that with the improvement of tax policies and the easing of economic inflation, the situation of South African retailers who are at a disadvantage will improve in the future.

At the same time, this is not all bad for cross-border e-commerce platforms such as Temu. By adjusting their operating strategies and improving compliance , they may usher in new growth points and opportunities.