Temu and Shein Disrupt South African E-Commerce, Triggering Local Store Closures

In recent months, Chinese e-commerce giants Temu and Shein have shaken up South Africa’s online retail market. Their rise has forced several local stores to close or sell, creating big changes in the industry. Thanks to low prices and strong marketing, these international retailers have put intense pressure on South African businesses. Major local players like Superbalist, Snatcher, and Zando have struggled to compete.

Temu and Shein’s Impact on South African E-Commerce

Temu and Shein have become extremely popular due to their low prices. They sell a wide range of products—from clothing to electronics—at prices that local stores can’t match. Their success is partly due to tax loopholes that allow them to sell goods at reduced prices. This shift has drawn many South African shoppers away from local stores, impacting the local e-commerce market.

In September 2024, Superbalist, a well-known local clothing retailer, was sold. The new owners are planning to cut its workforce by 28% to reduce costs and compete with Temu and Shein. Takealot, the parent company of Superbalist, reported that Superbalist’s losses were a key factor in its decision to sell. Similarly, Snatcher, an online tech store, closed down entirely after facing fierce competition from these global giants.

New Tax Rules to Help Local Businesses

To help local retailers compete, the South African Revenue Service (SARS) introduced new tax rules. Previously, parcels worth less than R500 were taxed at a 20% duty without VAT. From September 2024, VAT is now applied to all sub-R500 imports. By November 2024, the duty on small items will match the global World Customs Organisation (WCO) standards.

For example, a Temu shopper saw a rise in tax on two similar orders. The first order, without clothing, was taxed at 34%. The second, which included clothing, faced a 60% tax. This shows the effect of the new tax rules on imported goods.

What Local Stores Can Do

While the new tax rules might help, local businesses still face big challenges. Tshepo Marumule, head of public policy at Takealot, called for even stronger measures. He suggested that companies like Shein and Temu should be required to open local offices and hire South African workers. This would create jobs and help local stores compete more fairly.

Temu and Shein’s rise has put local South African retailers under immense pressure. While new taxes may provide some relief, local stores will need to adapt to stay competitive. The future of online retail in South Africa depends on both policy changes and innovation from local businesses.