Takealot is an online shopping platform, or online market place designed to provide a wide range of consumer products. The company’s business model is built on an online marketplace that offers a variety of products such as games, music, accessories books and items in lifestyle categories to name a few. Founded in 2010, with about 2000 employees Takealot is South Africa’s largest online retailer.
Ownership And Investment Strategy
In 2010, the former CEO of MWEB Kim Reid and a US-based investment firm Tiger Global Management acquired Take2, an existing ecommerce business in South Africa and renamed it takealot.com. Thereafter, Takealot.com was launched to the public in June 2011. The company has had a significant investment capital of about US$100 million in funding from the investment firm Tiger Global in 2014, and a cumulative investment of R4.5bn by Naspers. Overtime Naspers has slowly grown their share in the company to almost 96% share ownership. Whilst part of the growth in Takealot’s market share has been slow and steady, Takealot’s business model has greatly benefited from mergers. Some of the company’s mergers include acquisitions such as the merger with Naspers-owned Kalahari.com, where about R1.2 billion was paid by Naspers to Takealot. Kalahari.com was once one of the leading ecommerce giants in South Africa.
Takealot business model rests on these mergers including the merger between Superbalist and Spree, also owned by Naspers group. The company has grown into related businesses and markets by purchasing the food and courier company Mr D. Takealot is also part of an umbrella group of tech companies such as PayU, the payment system, the data research company ,Similarweb as well as the classified website OLX ,since all are part of Naspers group of companies. In addition, Takealot’s business model focuses on long term growth thus, the company’s return on investment is only realised in the long term and not in the short or medium term.
How Takealot Generates Revenue
Takealot’s business model like many other online platforms in South Africa provides the infrastructure for the company and other sellers to sell their goods. It is an online marketplace that offers a variety of products and allows other third parties to sell their items on the online marketplace. Apart from its own retail line, Takealot has a thriving marketplace for third party retailers that can use the online platform for sales, returns as well as its warehousing and fulfilment capabilities. The online retailer charges a subscription fee for the third parties that sell their products on their platform and also earns a commission from the products the company sells itself on the online marketplace in addition to advertisements.
Some of the percentage commissions charged on selected goods on the marketplace include
- Cameras have a 4% commission.
- Electronic Devices, Gadgets and wearable tech, Computer Components, Gaming Consoles, TV and Audio Equipment, Liquor and Soft drinks have a 7% commission
- Academic and trade books have a 10% commission
- Baby Products, Camping &Outdoor Equipment have a 15% commission
For third party retailers Takealot;
- There is a monthly subscription for a seller account which is R300 per month
- Storage fees that are charged based on the size of the product the third party want to sell as well as the number of days the item remains in stock. These charges can range from zero rands to R1800.
- The company also charges fulfilment fees for items shipped from the Takealot warehouse
Takeolot’s Business Model on Technology
Aside from investing in its warehousing and logistics capability Takealot has also invested in its technological capabilities. The company hires artificial intelligence experts who work on features such as algorithms in order to create personalization (such as recommendations based on a user’s browsing history). The company has employed 1200 employees, half of them work in the supply chain and 200 are in the call-centre department. There are also 1000 drivers that work with Mr Delivery Courier providing delivery services.
The success of Takelot’s business model also rests on the company’s strategy when it comes to logistics. In January 2013, takealot.com acquired a controlling stake in Mr Delivery in order to build out its own in-house logistics expertise under its own delivery Team. Currently, the ecommerce company contracts over 4 000 delivery drivers and completes over 1.6 million deliveries every month. The company has distribution centres 75 000m2 in total, in the Western Cape, Kwa-Zulu Natal and Gauteng. The distribution centre in Johannesburg can store almost 4 million products at any time and about 10 000 parcels are dispatched per hour. Takealot has three large warehouses, in Cape Town, KwaZulu-Natal and Johannesburg, and also several branches throughout the country, that handle orders for Takealot.com and its sister company Superbalist.com.
In April 2019, the online retailer opened its first series of collection points, branded Takealot Pickup Points. An innovative alternative option to delivery. This way customers can collect and return orders any day of the week. So far more than 50 Takealot Pickup Points are available in all the 9 provinces to enable the company to serve its 1.8 million customers all over the country.
Customers make orders on Takealot.com website, the products are then shipped and received at the distribution centre’s receiving depot. Takealot’s business model ensures that on average 80% of the orders are already in stock in the warehouse. A smooth process takes place between the delivery centre’s receiving depot, all the way to the storage of goods on shelves, boxing, and packaging, as well as classifying each order according to its delivery destination. The online retailor makes use of conveyor belts to systematically track the goods and for the correct classification of items before the collection trucks arrive. Takealot trucks then collect orders and distribute them to the local branches. Thereafter, the items are either taken to the collection points or delivered direct to the customer.
Customers are able to buy products of their own choice and securely because of the online retailer’s own efficient logistics services. Some industry insiders estimate that the annual revenue made by Takealot is R5 billion, or around R417 million a month. Some of the products that can be found on the online platform include;
- Personal Products
- Recreational Goods
- Electronics (B2C)
- Home Appliances
- Health and hygiene
- Groceries and household
- Sports and training
- Computer electronics