South Africa’s e-commerce giant Takealot expects the nationwide lockdown to blow a $20 million hole in its revenues, the chief executive said on Tuesday, but is hoping the government will relax rules on online sales to limit the damage.
President Cyril Ramaphosa announced a three-week lockdown on March 26, extending it by a further two weeks last Thursday, in a bid to contain the spread of Covid-19 in the country which has already seen 2 272 people infected and 27 deaths.
The Takealot business is set to take a hit of around R350 million in revenues, its chief executive Kim Reid told Reuters in an interview.
Takealot, owned by Africa’s most valuable company Naspers, has seen sales plummet since the lockdown began, leaving the company in “distress,” Reid said.
Under lockdown regulations that have drawn criticism from businesses and consumers, the state has banned in-store and online sales of clothing, electronics, freshly prepared food, tobacco and alcohol, and anything else government considers non-essential.
That has seen thousands of bars, restaurants and takeaway outlets close, leaving only grocery stores and pharmacies open for business and bringing the already ailing economy to a halt.
“Takealot is doing around 15% of the sales we’d normally do,” said Reid, CEO of the Takealot group which also includes food delivery service MrD Food and online clothes seller Superbalist.
The clothes and shoes selling unit had been completely shut while the food-hailing service was at around 2% capacity, mainly delivering medicines and certain foods through recently struck deals with pharma-chain MediRite and petrol station forecourts.
Takealot’s parent Naspers had said last week that many of its divisions were hurt due to the lockdown in various countries though it was too early to estimate the extent of damage.
Online retailing in South Africa is still in its infancy by global standards, accounting for 1.4% of total retail spending according to Visa.
However in recent years bricks-and-mortar retailers have been pouring money into a pivot to online shopping in a bid to adapt to the anticipated migration to e-commerce as data prices fall and the availability of cheap smart phones grows.
Reid said he was hoping the government would follow the model of China, United States and United Kingdom and allow the online retailer to sell non-essential items as “contact-less” deliveries would improve social distancing.
“If you look at the world right now, both food delivery and e-commerce has continued without any restrictions. There is every opportunity for us to operate in a contactless environment to increase social distancing in the country,” Reid said.