SA's leading online retail giant Takealot which is owned by Naspers is showing a brave face knowing the Amazon announcement is real with the US giant opening it's doors in February next year. My friend who I had dinner with last night knows people in Naspers and they are a little stunned they were not bought out. This was there plan from day one and it hasn't happened as they had expected as that is their business model. Invest in businesses with the aim of selling even if they have no clue what they are getting involved in. They throw enough money with the aim of making a massive profit on the sale walking away with a big smile.
I am privvy to various goings on in the market place and am aware of the issues Takealot has. This month they are refusing any returns to be returned to suppliers as they have been over run. This is worrying as those returns still stay as stock on the system making suppliers pull their hair out as that is not only money tied up but also prevents them form delivering.
Reverse logistics is what the correct term is and is a whole new ball game to get right. Most businesses are geared for what happens at the front door and neglect the back door. This is yet another prime case of poor management and a lack of understanding. A majority of the returns have no problems and can be resold or repackaged if required. Customers have up to 6 months to return items if they are faulty or 30 days no questions asked guarantee.
I expect the sales figures for the month of July to be seriously down as this will hinder normal operations. I know Walmart had a similar problem many years ago and wrote returns off immediately as they saw it as too time consuming which affected their bottom line. Auction the items off and keep the business operational.
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Normally this is seen as a cost center as it costs money and makes none. Going cheap and employing whoever fits their bill and budget is always a big mistake as it will cost them more in the long run.
A high percentage of online purchases are returned for various reasons with as much as 10% being mistakes as in change of mind or would prefer another item. I suspect the latest economy crunch that we are experiencing may have swayed many to return items they may not even need.
Suppliers who supply Takealot are basically kept in the dark for 1 month as they have no real idea how much real inventory they have available as returns are included as in stock. Some may have 0 sell able stock, but reflecting stock available therefore having no sales this month. This is very amateurish and why Amazon will eat the competition alive when they open their doors next year.
Many suppliers are talking about supplying Amazon already and cannot wait as Takealot readjusted their fees this month making it more expensive and less profitable. Possibly trying to make the most they can before the competition arrives. Little do they realise by the way they are operating they are alienating their suppliers and they will be in serious trouble come February as many are going to jump ship and drop Takealot.