Podcast Summary
South African e-commerce landscape: The sale of Superbalist to private equity could give the company resources to better compete and potentially close the gap on tax loophole exploiting competitors.
South African e-commerce company Superbalist has been sold to a consortium led by Blank Canvas Capital. This news comes after Takealot, a rival e-commerce company, publicly criticized Superbalist's main competitor, Xi'in and Timber, for exploiting a tax loophole that allowed them to import clothing at a lower tax rate than their competitors. Takealot's CEO, Kim Reid, argued that this unfair advantage needed to be addressed to level the playing field. The sale of Superbalist to private equity could potentially give the company the resources it needs to better compete in the market. Jan Hattingh from Real Inc joined the podcast to discuss the development and confirmed that the sale was not a surprise, as rumors of Superbalist being for sale had been circulating since March. The tax loophole controversy added fuel to the speculation, but the identity of the buyers was only confirmed yesterday. Overall, this sale marks a significant shift in the South African e-commerce landscape and could lead to more competition and innovation in the industry.
Superbalist sale: South African retail group Take-A-Lot is considering selling its online clothing retail subsidiary, Superbalist, due to intense competition and its inability to break even, with competition coming from Chinese retailers, local players, and e-commerce giant Amazon.
Take-A-Lot, a South African retail group, is considering selling their online clothing retail subsidiary, Superbalist, due to intense competition and the subsidiary's inability to break even. The competition comes from both Chinese retailers and local players like Xi and Timu, as well as e-commerce giant Amazon. Take-A-Lot, which had broken even in the last financial year, had only struggled to make Superbalist profitable. The CEO of Take-A-Lot, Afridian Zita, confirmed that Superbalist was the only part of the business that had not broken even. Given the challenging space of online clothing retail and Superbalist's status as the underperforming subsidiary, it's not surprising that Take-A-Lot might be looking to offload it. Another factor to consider is the role of private equity firms, such as Blank Canvas Capital, in the retail sector. While they might provide an exit strategy, their mandates and priorities may not always align with those of the retailers they invest in. Therefore, it remains to be seen how Blank Canvas Capital will navigate this situation and whether they can turn Superbalist around.
Superbalist acquisition implications: The future of Superbalist's relationship with Blank Canvas and Take-A-Lot, and the potential impact on Superbalist's infrastructure and synergies, is uncertain following the acquisition.
The acquisition of Superbalist by Blank Canvas is still unfolding, and the full implications of the deal are not yet clear. Blank Canvas is a well-known industry player, but their intentions and the price paid for Superbalist are currently unknown. Take-A-Lot, the former owner of Superbalist, still has involvement in the company and may continue to leverage shared infrastructure. Superbalist is currently using some of Take-A-Lot's technical infrastructure, but it remains to be seen if they will seek better deals elsewhere. Blank Canvas also has a stake in a courier company, which could be utilized to exploit synergies between their portfolio of companies. Overall, the coming months will provide more clarity on the future of Superbalist and its relationship with Blank Canvas and Take-A-Lot.
Regulatory hurdles for e-commerce companies: Regulatory challenges in various markets can deter smaller e-commerce companies from entering or growing, particularly those yet to break even. New owners may have strategies to ensure sustainability or growth, such as leveraging complementary resources or partnering with specialized logistics companies.
The entry of Xi, a large Chinese e-commerce company owned by Naspers, into the apparel e-commerce business through Temu, and the regulatory hurdles it faces in various markets, including South Africa and the US, could deter smaller companies from entering or growing in this space. This is particularly concerning for businesses like Superbalist, which is yet to break even and has recently undergone retrenchments. There are fears that critical skills may have left the company before its sale. However, Blank Canvas Capital, the new owner, may have strategies to ensure Superbalist's sustainability or growth, such as leveraging complementary resources within their group or partnering with specialized logistics companies to remain competitive. For instance, Zando, a South African e-commerce company, has launched a Xian or Temu competitor with a dedicated China-Africa import and customs clearing service. Blank Canvas could explore similar avenues to help Superbalist thrive in the face of competition from larger players.
Online Clothing Industry Taxes, South Africa: New taxes, including a 15% commission on top of the existing 20% VAT, are being introduced in the South African online clothing industry, posing challenges for new and small entrants and potential opportunities for disruption by innovative players
The online clothing industry in South Africa is experiencing significant growth and disruption. Companies like Superbalist and Tim You are revolutionizing the industry with their high-volume, limited-run business models and integration of third-party supply chains. However, there are regulatory challenges that need to be addressed to ensure a level playing field for new and small entrants. The South African Revenue Service (SARS) has announced new taxes, with a 15% commission on top of the existing 20% value-added tax, effective from September 1, 2023, and another change coming into effect on November 1, 2023. These developments show that the industry is far from mature and that new players, even from outside the country, can disrupt the market with innovative approaches.
South Africa e-commerce tax laws: South Africa's e-commerce tax law changes could level the playing field for local businesses and address the maturing e-commerce market, highlighting the importance of persistence and adaptability in business models
South Africa is undergoing significant changes to its e-commerce tax laws, which could potentially level the playing field for local businesses competing against international ones. This overhaul is an important step towards addressing the maturing e-commerce market and the disruptive innovation coming from regions like Asia. It's a reminder of how countries and industries can evolve, as seen when China transformed from a source of counterfeit goods to a manufacturing powerhouse. This lesson underscores the importance of persistence and adaptability in business models.