By: Dr Ernst van Biljon - Head Lecturer and Programme Coordinator M Com in Supply Chain Management, IMM Graduate School

In South Africa’s e-commerce landscape, companies such as Shein, Wish, Temu, and Takealot have set themselves apart through their highly efficient and innovative supply chain strategies. While Amazon has yet to set itself apart, it is still expected to.

The supply chain tactics of these e-commerce giants serve to improve consumer satisfaction and corporate success in addition to ensuring effective operations, and are worthy of close study.

For instance, Shein's supply chain agility is a cornerstone of its success. The company utilises a flexible production system, close supplier coordination, and real-time data analytics to swiftly respond to changing consumer demands. This model allows for fast turnaround times for new designs and quick restocking of popular items. By maintaining strong relationships with a vast network of suppliers, Shein minimises lead times and reduces the risk of overproduction. This strategy ensures that it can offer a wide range of fashionable products to its global customer base while enhancing operational efficiency.

Wish, on the other hand, leverages a data-driven strategy to optimise its supply chain, utilising extensive customer data to enhance operational efficiency and decision-making. By analysing user behaviour, preferences, and purchase trends, the company can accurately predict demand and adjust its inventory accordingly. This approach personalises product recommendations and streamlines the consumer experience, ensuring high customer satisfaction. Advanced algorithms help optimise distribution and logistics, reducing delivery costs and delays. These data-driven insights also help determine the best routes and methods for product delivery, enhancing overall supply chain performance.

Temu is a rising star in the online retail world. It has implemented a robust international supply chain strategy to ensure efficient global delivery. By forming strategic alliances with global logistics and supplier companies, Temu effectively manages the complexities of international shipping, customs, and regulations. The company operates sophisticated logistical networks with regional distribution centers, reducing shipping times and costs. Technology plays a key role in inventory management and real-time tracking, improving visibility and collaboration across the supply chain.

Takealot is a well-known South African brand sourcing goods from a diverse range of vendors, including manufacturers, retailers, and wholesalers, ensuring competitive pricing, while inventory levels are continuously monitored to maintain optimal stock levels. It partners with logistics firms to manage the delivery of goods via air, sea, and road transport and customers can track their orders online.

These companies’ systems have of course evolved over time, including various instances of failure in product and supply chain over the years. Not all their e-commerce and logistics systems can yet be classified as world-leading, notwithstanding their notable successes.

Amazon's recent ‘soft’ launch in South Africa offers valuable insights for both local and international retailers. The initial reception was muted, with many South African consumers finding the product offerings undifferentiated from existing options. Despite leveraging local partnerships for customer service and logistics, Amazon faced significant challenges, including a limited product selection and the absence of Amazon Prime. This highlights the importance of understanding local market needs and establishing a robust logistical framework for seamless operations.

Nonetheless, Amazon is poised to become a dominant force in South Africa in the future. Its regional and global e-commerce strategies are rooted in superior e-commerce and logistics technologies and continuous innovation. Therefore, despite its underwhelming launch Amazon has the potential to reshape South Africa's e-commerce landscape, leveraging its global expertise and resources and will doubtless make a significant impact in the coming years. They aim in time to introduce Amazon Prime, potentially reshaping customer expectations with features like free delivery and Prime Video.

The strong online market in South Africa reflects that these e-commerce offerings take a long-term strategy viewing this country as a gateway to the broader African market. We may also witness some consolidation of players in the domestic market. Amazon for instance plans significant investments, including local vehicle manufacturing in Cape Town, indicating its serious commitment to establishing a robust presence.

That some of the newer entrants to the e-commerce market have already shaken up local competition is reflected in the successful push by Foschini Group for the South African Revenue Service (SARS) to levy a new import tax.

Starting soon, low-value and small-volume clothing orders from Temu and Shein will face higher taxes in South Africa. SARS will impose a 45% import duty plus VAT on all clothing parcels. Low-value and small-volume orders of clothing from Temu and Shein had previously not attracted full import duty and no VAT. This had allowed Shein and Temu to get clothing parcels of under R500 through customs with a 20% import duty and 0% VAT.

This significant change aims to support and protect local industry by addressing the tax loophole previously exploited by these Chinese companies, which allowed them to import at lower costs. Economically, protectionist strategies have not proven successful globally or in the South African market. They often result in local companies falling behind in competitiveness and lacking incentives to innovate. Additionally, such strategies are rarely sustainable in the long term and are often overridden by trading agreements. The fashion and textile industries have generally not demonstrated the effectiveness of protectionism.

The supply chain strategies of Shein, Wish, Temu, and Takealot not only ensure efficient operations but also enhance customer satisfaction and business success. Understanding and implementing these advanced supply chain techniques can provide a competitive edge in the market.