Superbalist girds itself for Shein threat

Superbalist is limiting private labels on its platform and adding more global brands to its categories as it fights for market share against aggressive Chinese rival Shein. 

One of the first local online clothing and footwear retailers, Superbalist has blamed the rapid rise of Shein for its poor performance in the year to March.

Shein sells a range of fast-fashion apparel at lower prices than Superbalist and other online retailers. It said tough trading conditions had increased competition from local players, in the form of aggressive pricing to stimulate depressed consumer demand. The acceleration of international players had also impacted Superbalist.com’s revenue growth, which increased by 7%.

It would limit private or in-house labels to certain subcategories, while partnering with global fashion retailers to offer a wider assortment of products as it builds on its existing tie-up with Swedish retailer H&M, which sells its apparel on the Superbalist website.

“Superbalist has seen a difficult year, to be honest, over the last financial year. They were in the eye of the storm when it came to the entry of Shein into the country. Superbalist is a brand that still focuses on the niche customer. It’s a fashion-specific vertical. I think there are a couple of fundamentals that need to come into play,” said Takealot Group CEO Frederik Zietsman.

“We need to reposition the offering and think about some value-add we can bring in.” 

Superbalist was founded in 2010 as Citymob, a coupon site that transitioned into selling art, electronics and fashion. It rebranded in 2013, selling international fashion brands such as G-Star Raw and Diesel, before being bought by Takealot in 2014.

Superbalist has seen a difficult year, to be honest, over the last financial year. They were in the eye of the storm when it came to the entry of Shein into the country

—  Frederik Zietsman, Takealot Group CEO  

In 2018, it merged with Spree. In the 2023 financial year, Superbalist’s revenue rose by 11%, despite increased competitive pressure from online retailers, while aggressive pricing from bricks-and-mortar apparel stores, coupled with discounts to clear ageing stock, squeezed margins and resulted in higher trading losses. In the 2022 financial year, Superbalist delivered strong revenue growth of 55%. The company does not publicly disclose its full financial performance.

However, its poor performance dragged down the overall profitability of the Takealot Group, which includes Takealot.com and Mr D Food — both profitable in 2023. The Takealot Group reported a 2% decline in revenues to $792m (R14.5bn) — a trading loss of $14m, down from $22m a year earlier.  

Despite Superbalist’s struggles, the Takealot Group has no plans to sell it. “If you look at the apparel and footwear category, as a section of the total retail market it’s a very lucrative size. It’s not something you can ignore,” said Zietsman.

While Superbalist, which had a first-mover advantage in the online apparel space, is blaming Shein and Temu for its woes, local competitors such as Bash are rapidly accelerating their business.

Bash.com, TFG’s e-commerce platform that was launched about two years ago, sells all the group’s clothing products, as well as homeware. In the 2024 financial year, the online retailer’s turnover grew 44.4% and now contributes 4.2% to TFG’s retail turnover. The business saw a record gross profit of R16.1bn and 24.9% growth in earnings before interest and tax to R4.2bn. It recorded a 45% increase in first-time shoppers, and 64% of them had never shopped at TFG before. 

Zietsman said Bash had decades to build up its well-known brands, and its target market was different from Superbalist’s in some categories.

“Superbalist has [products] you can’t find elsewhere. Many customers in Superbalist verticals demand certain styles and products you can’t find at TFG. There is a fragmentation in categories.”

South Africa’s online retail sector grew 29% to R71bn last year, and is rapidly accounting for a significant portion of total sales for traditional retailers. A new study by World Wide Worx forecasts that the online retail sector will pass the R100bn mark to account for 10% of total national retail sales in the next two years.

Much of this growth is attributed to the strategic shift by traditional retailers towards competitive e-commerce and enhanced customer service, supported by sophisticated AI-driven tools, said Naspers in its annual report. 

Zietsman has called for more regulatory intervention to protect the local industry. From tomorrow, the South African Revenue Service (Sars) will charge all apparel packages the same 45% tariff plus VAT.

“Our view is there’s still a lot of work that needs to be done. We have engaged with Sars to make sure the lifting of the concession is not a paper tiger, but it’s actually a real executable change.”

The Takealot Group’s head of legal, Johannes Burger, said other countries and trading blocs — such as the US, the EU, Australia and Turkey — were also implementing regulatory interventions to protect their economies. 

Burger said he would support the idea of an e-commerce law to protect South African businesses.  

“I think it’s very difficult at this point to come up with a single silver-bullet proposal that’s going to solve everything. I think there needs to be considered research and understanding of what the issues are and what the levers are. I do think that a form of a B-to-C [business to consumer] e-commerce tariff is worth considering.”

The Takealot Group, which has 11,000 sellers on its platform, is implementing a number of new initiatives to attract customers, including a subscription fee for Mr D Food and takealot.com.