SBI wary about Commission’s decision to probe Takealot

An investigation into leading ecommerce retailer Takealot’s dominance in the online shopping arena will do more harm than good, and possibly even stunt the growth of the digital economy.
Instead there should be a focus on getting SMMEs into the digital economy by focusing on issues such as the cost of broadband and upskilling entrepreneurs, Small Business Institute (SBI) CEO John Dludlu said.
He made these comments after the Competition Commission revealed that it would investigate the company and other online platforms like Amazon in a document titled: “Competition in the Digital Economy”.
The document provides a review of the emerging competition issues in ecommerce and consumer empowerment.
The commission has recommended a change in policy to accommodate growing digital platforms. It said a national digital strategy should provide for incentive schemes to make export markets more accessible to domestic small start-ups, which should include linking them to global value chains.
“In this regard, the industrial policy must facilitate investment in digital infrastructure, skills development and digital firms, particularly SMEs,” the document reads.
“As part of the industrial strategy, policymakers may provide subsidies or indirect support to local firms that are innovative or use existing products and services that can be incrementally improved and help them compete in the global market.”
The commission’s concerns included mergers, which the commission believed raised barriers for start-ups and online resale price maintenance, which allowed manufacturers and distributors to agree to sell the manufacturer’s product at certain prices.
But Dludlu believed that the commission should instead focus on other aspects of the digital economy.
“While the SBI is fully supportive of regulations and sanctions against the potential harm such abuse can cause to competitors and smaller players in downstream markets, we would suggest there may be other priorities to enable a more competitive digital economy, such as extending the footprint and lowering costs for broadband, enhancing computer skills training and investing in national research and development,” he said.
“Further, in the wake of lockdown and an earlier economically destructive decision by government to forbid most ecommerce and online sales, the timing of this suggestion could not be worse.”
Dludlu said online marketplaces represented a real opportunity for SMMEs to trade.
“They also make it easy by handling payments and logistics and removing the requirement for a small business without the right skills or infrastructure to set up their own websites and distribution channels, let alone to access a wider – even regional or international – market,” he explained.
According to Dludlu, the UN Africa Marketplace Explorer, which identified Gumtree as larger than Takealot, also identified dominant players and suggested that they face considerable competition in certain parts of the world.
“Their research confirms that the world’s largest marketplaces do not have a strong presence in Africa, which opens up opportunities for local marketplaces,” he said.
“South Africa already has over 100 online marketplaces, more than any other country on the continent. Most sites are classifieds relatively few are transactional, but 80% are domestic players.
“In 2019, Takealot received 114 million visitors, or 17.5% of the 650 million visitors to South African online marketplaces,” he said.