Temu's Rapid Expansion in South Africa Causes Logistical Strains and Alters eCommerce Landscape

The eCommerce market in South Africa is witnessing a seismic shift with the entry of Temu, an emerging online retail powerhouse that officially began operations on January 17, 2024. Within weeks of its launch, Temu, along with its Chinese counterpart Shein, has dramatically risen in popularity, leading to an overwhelming surge in orders—so much so that Buffalo International Logistics, their logistics partner, has reported difficulties in managing the heavy volume of shipments.

Customers awaiting their packages received notifications alerting them to expect approximately a one-week delay. Buffalo International Logistics cited not only the unexpected surge but also internal network issues within its customer service department as causes for the inconvenience. This hiccup in deliveries speaks to the remarkably swift market penetration that Temu has achieved, leveraging ultra-competitive pricing and free shipping to challenge established local players like Superbalist and Bash.

With product offers ranging from as low as R10 to upwards of R1,000 for higher-end items, Temu has positioned itself as an irresistible shopping destination, particularly for cost-conscious consumers. This move has been bolstered by an aggressive marketing strategy which has yielded significant traction for the Temu: Shop Like a Billionaire app, now topping download charts across Android platforms in South Africa, outperforming even global giants like WhatsApp and TikTok.

Taking notes from their successful foray into the United States, where Temu invested an estimated $3 billion in online advertising in 2023, the company is embarking on a similarly robust marketing campaign within South African borders. Such efforts have snagged them the title of the biggest advertiser on Meta platforms, and their current trajectory suggests an even stronger commitment to capturing market share through advertising this year.

Local eCommerce firms are feeling the pressure of this new competitive dynamic. The Wall Street Journal has reported that even Amazon executives view Temu and Shein as more of a threat than traditional rivals like Walmart and Target, hinting at the disruptive potential both companies hold. In South Africa, incumbent market leader Takealot is reconsidering its portfolio, particularly with regards to its fashion subsidiary Superbalist, in the face of the burgeoning success of low-cost Chinese retailers.

Despite Takealot's readiness to spar with Amazon as it prepares to introduce a South African marketplace, the concern around the impact of value-driven stores like Shein, Temu, and Wish is palpable. Industry experts suggest that Takealot may find it judicious to divest from Superbalist and pivot its core focus. When approached by Daily Investor for insights into the planned Superbalist sale and the rise of their Chinese competitors, Takealot declined to comment, indicating a market bracing for more transformation.