Will consumers win in local industry’s battle against Shein and Temu?

With Takealot becoming the latest local company to grumble about the unfair advantages Shein and Temu have that make consumers flock to them to spend their income, you have to wonder who will emerge as the winner: the South African consumer or the South African companies?

We have all heard the reasons why we should not buy from Shein and Temu: human rights abuses in how workers are treated where the products are made, manufacturing processes that are bad for the environment, bad quality products and the fact that they will kill off local small businesses.

However, consumers say they have little money to spend and that they get more from Shein and Temu for their money. They do not care how the products are made. They get what they order and at a good price.

They feel so strongly about it that there are petitions doing the rounds to ask Sars to stop its plans to make Shein and Temu pay the same customs tax as any other company bringing products in from overseas.

It is a fact that the economy is not growing. Consumers are not earning more. They are paying more for the basics. Years of conditioning to reward themselves with some retail therapy for sticking to their budgets now come into play and they want to buy nice things.

South African products are too expensive, consumers say

However, the nice things made in South Africa will sink their budgets and therefore they turn to Shein and Temu where they get more bang for their buck. The Covid epidemic prepared them well for online shopping and they are experts now. There is no stopping local consumers buying where they can get more for less.

ALSO READ: You will soon pay more, and the correct tax, for orders from Shein and Temu

Takealot is the latest local company complaining about the unfair advantage Temu and Shein seem to have and wants the playing field in South Africa’s e-commerce sector to be levelled. It wants fair competition, the e-tailer says in the parent company, Naspers’ 2024 Integrated Annual Report.

“The Takealot Group firmly believes that fair competition benefits everyone – it enhances consumer choice, bolsters South Africa’s fiscal health and stimulates the growth of the e-commerce sector. Since its inception, Takealot has been a trailblazer in the e-commerce sector in South Africa – introducing a range of innovative services and products that have significantly broadened the scope of online shopping for consumers.”

ALSO READ: Sars’ Shein and Temu crackdown: Association warns of smuggling and job losses

Growing concern that Temu and Shein threaten local localisation

However, Takealot says, the rise of e-commerce platforms such as Shein and Temu in South Africa underscores a growing concern that threatens the nation’s reindustrialisation and localisation efforts.

“These platforms contribute to a market imbalance by flooding the market with inexpensive imports. This influx is particularly noticeable in the local apparel sector due to Shein and in the wider general merchandise market, affected by both Shein and Temu. These trends pose significant challenges to the development and sustainability of domestic industries.”

Takealot blames regulatory gaps in South Africa’s e-commerce sector that let e-commerce platforms exploit outdated regulations and loopholes by using shipping methods that allow them to offer products at exceptionally low prices while avoiding duties, taxes and other government fees imposed on conventional retailers.

“The current governance landscape in e-commerce does not sufficiently address the need for fair competition – a disparity that leads to significant revenue losses and reduced capacity for local job creation. It also leaves domestic retailers, both online and offline, at a disadvantage. It is imperative that policy-makers craft regulations to level the playing field, ensuring all participants adhere to the same standards and practices and contribute fairly to the national economy.”

ALSO READ: Patel calls for level fashion playing field as Temu and Shein affect competition

Takealot wants fair competition

Takealot says it has engaged with key stakeholders to underscore the importance of fostering fair competition, enforcing existing regulations on new offshore players that skirt these rules and considering additional measures to address e-commerce challenges comprehensively, ensuring a level playing field for all participants. Globally, regulators in major economies are doing just that.

This call for fairness is not just about maintaining competitiveness, but the goal is to safeguard the integrity of South Africa’s retail, including small businesses and ensure sustainable growth for all.

Ultimately, Takealot says, what is needed is a balanced, inclusive and competitive marketplace where local and international businesses thrive by contributing equitably to the nation’s economic growth and job creation and where consumers enjoy a wide range of high-quality, affordable products and services.

Sars has now implemented measures to close the regulatory loopholes and from 1 July consumers who buy from Temu and Shein will pay the same taxes as everybody else. Now consumers are unhappy. Some who buy from Shein and Temu and sell it from their own local small businesses in South Africa, making a tidy profit, are not happy.

Who will win in the end?