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Temu says it has launched a local warehouse in South Africa, allowing it to provide shoppers much faster delivery times.
The direct-from-China online marketplace tags items available from its South African warehouse as “local”, with delivery times of under two days, including next-day delivery.
Interestingly, it does not indicate which courier will deliver the item. Non-local listings show that Buffalo Logistics imports the products and Fastway delivers them.
Temu’s announcement of a local warehouse is the company’s first major indication of domestic expansion since its launch 18 months ago.
The e-commerce platform debuted in South Africa in January 2024, offering discounted goods imported directly from China through local logistics partners.
Temu saw a surge in popularity in South Africa and several other countries outside China, driven by its aggressive prices and massive online marketing spending in 2023 and early 2024.
According to a report by MediaRadar, the retailer increased its advertising budget by 1,000% in 2023, a large portion of which was used for paid social media promotions.
One of Temu’s most effective tools has been its use of gamification, which pulled in first-time shoppers with a virtual spinning wheel that awarded them significant discounts on their initial purchases.
Goldman Sachs previously estimated that Temu’s significant marketing spending resulted in a loss of $7 per order.
Within months of Temu’s entry into the South African market, it and rival Chinese marketplace Shein faced significant backlash from local businesses.
Online retailers and representatives of goods manufacturers in South Africa called attention to tax loopholes being exploited by foreign importers, allowing them to undercut domestic players.
Industry sources explained that the problem was a South African Revenue Service (Sars) concession from 2007, which allowed importers to pay a flat duty rate of 20% without VAT on low-value imports below R500.
That concession aimed to simplify customs clearance processes for logistics companies as international e-commerce activity accelerated.
However, retailers said the concession was being exploited to avoid the 45% duty on imported clothes, creating an unfair playing field in the clothing and textile sector.
In the technology sector, local players said Temu was allowing merchants on its platform to sell goods into South Africa without the proper electrical and radio certifications.
Sars initially responded to complaints from the local industry by announcing it would levy the entire 45% clothing tax on all applicable imports, including those valued under R500, from 1 July 2024.
The tax collector estimated that, given the rise in global e-commerce trade, these loopholes resulted in tax losses close to R3.5 billion.
However, Sars put this plan on permanent hold. Instead, the taxman said it implemented an interim measure from 1 September 2024 and began levying 15% VAT on top of the 20% duty on low-value orders.
From 1 November 2024, Sars said it would reconfigure the 20% flat duty to align with the World Customs Organisation (WCO) import guidelines.
However, these new rules were not implemented until February this year, as additional time was needed to ensure they balanced the interests of various industry stakeholders.
This was according to South African Express Parcel Association chair Garry Marshall, who maintained that nothing the Chinese retailers or their logistics partners did at customs was illegal.
He said the main issue with the mechanism was its impact on South Africa’s clothing and textile industry.
Marshall added that scrapping the concession to eliminate the 20% flat duty loophole could have had disastrous consequences for import procedures.
This was because its primary purpose was not to reduce consumer costs but to speed up deliveries.
“The vast majority of courier traffic coming in is cleared through customs before it even arrives in the country,” Marshall said.
“If you were going to submit the documents with all the tariff codes to customs, it could take days to clear a shipment.”
MyBroadband contacted Temu for comment about the announcement of its local warehouse, and it did not respond by publication.
Issued on MyBroadband by Jan Vermeulen | https://mybroadband.co.za/news/internet/601658-temu-launches-warehouse-in-south-africa.html
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