Trouble In Store: New Challenges for Shein and Temu Devotees in South Africa

By: Nicole Araujo (African Antitrust)

The rise of international e-commerce giants Shein and Temu — famous for their “ultra-cheap, ultra-fast” shopping experiences — has captured the attention of many South African consumers. These platforms have disrupted the market, posing a serious challenge to Takealot, the long-established leader, and raising concerns about the future of local competitors.

Doris Tshepe, Commissioner of the South African Competition Commission, highlighted the need for “all tools of government” to ensure fair competition, especially with the entry of major players like Amazon, Shein, and Temu. Her statement follows the release of the Commission’s Final Report on the Online Intermediation Platforms Market Inquiry (OIPMI) in July 2023, which identified Takealot as the dominant player with over 35% of online transactions.

As South Africa’s e-commerce sector expands rapidly, stronger competition regulations and updated policies are becoming increasingly necessary. While the OIPMI analyzed the market conditions at the time, the emergence of these international platforms, which were not covered by the initial inquiry, may now require a shift in regulatory focus.

To address the influx of low-value imports from Shein and Temu, the South African Revenue Service (SARS) implemented new tax rules in September 2024. Domestic retailers are taxed at 45% on imported clothing, while international platforms reportedly circumvent higher duties by splitting large orders into smaller shipments to stay under the R500 threshold. The new regulations subject even these smaller items to VAT and a 20% flat rate, regardless of their value.

While it is still too early to measure the full effect of these tax changes on sales, the adjustments aim to reduce the competitive advantage of cheaper imports by raising costs, making local options more appealing to consumers. Takealot, however, continues to push for further government intervention to ensure greater fairness in the market…

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