Takealot may start to sell groceries
Takealot has an opportunity to start selling groceries in South Africa thanks to its extensive delivery and warehouse infrastructure and technology.
This is the view of Naspers and Prosus chief financial officer, Basil Sgourdos. Naspers owns 100% of Takealot.
News24 quoted Sgourdos as saying perishable goods will be something new for Takealot and a “completely different category of goods to its current operations”.
“The expansion will probably have to be organic, but it is certainly attractive,” he said.
Delivering groceries will be a completely new category for Takealot, but it is not too far away from what it is already doing.
Through Mr. D Food, Takealot provides a convenient way for South Africans to order food from restaurants.
The company has the IT infrastructure and logistics in place to deliver products fast and affordably to consumers and expanding into perishable goods is, therefore, a natural evolution to grow its eCommerce presence in South Africa.
Takealot will face stiff competition in this market, though. Checkers, Pick n Pay, and Woolworths have excellent eCommerce operations with growing support.
These retailers are investing heavily in their eCommerce capabilities and their platforms – Checkers Sixty60, PnP Bottles, and Woolies Dash all offer excellent service levels.
While it will enter a hotly contested space, Naspers, through Prosus, is well-positioned to help Takealot offer grocery deliveries in South Africa.
Prosus has investments in many prominent food delivery platforms including iFood, Delivery Hero, and Swiggy.
“While food delivery is one of the key pillars of the Prosus strategy, we expect to see an evolution to a broader on-demand delivery ecosystem,” Prosus said.
The company’s focus is now to extend beyond restaurants to convenience, grocery delivery, and logistics.
“All our food delivery businesses have rolled out convenience and grocery delivery,” Prosus said.
In January 2021, Prosus extended its presence in this field through investment in Helsinki-based delivery platform Wolt.
Wolt started with restaurant deliveries but has moved into delivering products from grocery stores and local shops to homes and offices.
In April 2021, Prosus made its first direct investment in an online grocery business, Norwegian-based Oda.
This followed with an investment in Germany-based instant grocery delivery company Flink in June.
With these investments through Prosus, it is clear that Naspers believes grocery deliveries are a growth area.
Just like with their international food delivery businesses, it will make sense to extend Mr. D’s operations to convenience and grocery deliveries.
Takealot has experienced exceptional growth over the last year, increasing its revenues by 65% to US$606 million (R8.7 billion).
The company — which includes Takealot.com, Superbalist, and Mr. D Food — also reported Gross Merchandise Value growth of 84%. This represents the total value of sales made through its platform, including third-party sellers.
Mr. D Food delivered particularly strong results as consumer demand shifted from in-restaurant dining to online delivery.
Mr. D Food’s order volumes grew 117%, resulting in a 103% growth in revenues year on year.
This growth has helped Takealot to reduce its trading loss from US$43 million (R618 million) to US$7 million (R101 million) over the last year.
US$6 million of this trading loss came in the first half of the financial year during which the hard lockdown hurt online retailers. In the second half of the year, the loss narrowed to US$1 million.
Takealot is therefore set to make a profit for the first time since it launched a decade ago.