In January 2024, Temu quietly launched in South Africa. Owned by the Chinese e-commerce giant Pinduoduo, Temu is an e-commerce marketplace known for providing a vast array of extremely cheap goods to customers. It has achieved this by aggregating more than 100 000 Chinese e-commerce sellers and building out a fulfilment operation to ensure delivery to a customer’s door.
Not the first
Temu is not the first Chinese entrant into the South African e-commerce market. Aliexpress has been shipping to SA for many years, but the experience has significantly more friction as goods are shipped directly from sellers themselves rather than a centralised fulfilment operation. Shein entered the South African market in 2023. However, it is focused on fashion and mostly sells its own inventory rather than being a fully-fledged e-commerce marketplace.
Products ordered from Temu take much longer to arrive, anywhere from 8 days to 3 weeks, and involves several ‘surprise’ costs in the form of VAT and import duties. Despite this, Temu’s value proposition of extremely cheap goods is one that South African consumers really like. Within two weeks of launch, Temu was the most downloaded app in South Africa on both the Google Play and Apple App Stores.
Temu’s entrance into South Africa represents a threat to the local e-commerce ecosystem both to marketplaces like Takealot, Bobshop (formerly BidorBuy) and (the soon-to-be-launched) Amazon South Africa and to the sellers on these marketplaces. For decades, the retail relationship has worked as follows: China manufactures the product, and domestic retailers brand, market, and distribute it in their respective countries. In retail parlance, this is known as Private Labeling and is the model used by most sellers on e-commerce marketplaces. Yet Temu is turning this relationship on its head, enabling the consumer to cut out the domestic seller entirely and buy directly from the manufacturer, all while paying a fraction of the price.
In the short term, this is particularly problematic for the South African seller since many products sold on Takealot are almost indistinguishable from those on Temu. Sellers are yet to embrace brand building and provide the customer with sufficient reason to pay a premium for a similar product.
Marketplace sellers in South Africa are in their infancy and typically source a wide variety of products rather than focusing on a specific niche. Additionally, Takealot does not provide sellers with sufficient tools to build brands on their platform. Sellers will often launch a product on Takealot only to find that they have the buy box taken from them by another seller, who has imported a cheaper and inferior version of the product. Takealot will only help if a seller can produce a registered trademark. However, registering a trademark in South Africa typically takes 18 months to complete by then, the quality of products sold on the listing has decreased significantly. South African
Threat to Takealot
Takealot will need to be able to provide a suite of tools for sellers to manage and grow brands on their platform. While they are starting to get their act together, their performance to date has been subpar.