Article Main Page

How Takealot crushed Makro

2020-08-08 -

The latest Naspers results showed that Takealot extended its leadership in the South African ecommerce market with 46% year-on-year growth in Gross Merchandise Volume (GMV). One of the main drivers behind this growth was Takealot’s marketplace business, which grew GMV by 77% over the last year. Takealot’s dominance is no coincidence. Since its launch in June 2011, it focussed on the most important aspect of any online business â€` logistics. Its acquisition of Mr Delivery in 2014 gave the business ownership over its own logistics network through the Takealot Delivery Team division â€` formerly Mr D Courier. Takealot scaled up its delivery capability since the acquisition and currently offers unrivalled service levels and support. Takealot versus Makro Takealot has become the Amazon of South Africa and has crushed competitors like Makro, which once looked like a promising alternative. Makro is a trusted brand with a national network of stores, exceptional buying power, and established logistics partnerships. With these valuable assets, many expected Makro to go toe-to-toe with Takealot in the ecommerce market

This did not happen. The main reason is logistics. While Takealot consistently improved its delivery network and service levels, Makro’s logistics fell apart. Many online shoppers wait for weeks for their Makro orders to be delivered, and their support channels are a mess. Another big difference between Takealot and Makro is the way their marketplace deliveries work. Takealot centralised its marketplace logistics, which means shoppers who purchase a product through its platform receive a consistent experience, independent of the seller. Makro, in comparison, has a decentralised model which leaves it up to third-party sellers to send packages to shoppers. This has caused so many problems that Makro is reportedly dropping many sellers and products from its platform. Makro’s ecommerce experience has become synonymous with delivery problems and many experienced online shoppers are now avoiding the platform. Makro addressing the problem A recent interview with Massmart CEO Mitchell Slape revealed that the company is aware of these problems and is planning to address its logistics challenges. Slape said they know they must improve on their customer experience and it is something which they are focussed on. Despite the delivery challenges, Makro, Game, and Builders Warehouse’s online sales still saw triple-digit growth during the lockdown. To support this growth, Massmart is now planning to invest heavily in its ecommerce platform. Slape did not supply details about where the money will go, but if they want to take on Takealot they will have to improve their logistics. To match Takealot’s service levels will not be easy, especially as it continues to invest in its logistics network. Last year, for example, Takealot launched 25 new collection points for customers across South Africa. It is also not clear what the future holds for Makro’s marketplace, which will struggle to compete against Takealot without centralised logistics. For Makro to effectively compete against Takealot, it must restore trust among online shoppers. They must know they will receive their orders on time. While pricing is a big consideration, the joy of paying less quickly disappears when your package is not delivered on time and you have to deal with poor logistics support. Unless Makro gets this right, it will always be seen as the poor man’s alternative to Takealot.