There’s a seller in Shenzhen named Old Chen who opened two Takealot stores at the same time last year.

One is a cross-border store operating under a Chinese business license that ships directly to customers. The other is a local store operated by a company registered in South Africa, with inventory stored in a local warehouse.

Same product selection, same operational rhythm. At the end of the year, Old Chen ran the numbers and was stunned by what he saw—the two stores had roughly the same annual sales, both around 1 million rand, but their net profits differed by nearly 110,000 rand.

That comes out to about 45,000 yuan.

In today’s post, I’ll break down the numbers for you.

Let's start by clarifying a basic concept. There are two ways to open a store on Takealot:

cross-border store, You can set up a store using a Chinese business license. The platform supports direct shipping, and funds are returned to China via a third-party payment service. The barrier to entry is low, and you can launch your store in just 3 days, making it ideal for quickly testing the waters.

local store, registered using a South African business license, with inventory stored in a local South African warehouse and payments processed directly through a local South African bank account. The entry barriers are high, but this approach offers preferential platform traffic allocation and a more favorable operating environment.

At first glance, the monthly rent for both types of stores is the same (400 rand/month), and the commission rates are also the same (5%–18%, depending on the category), so there doesn’t seem to be much difference.

But what really sets companies apart is never the obvious costs—it’s the ”hidden costs” embedded throughout the entire operational chain.

The key differences are concentrated in four areas:

First, delivery times.With cross-border direct shipping from China, it takes 14–20 days for consumers to receive their orders. Orders from local stores are shipped from warehouses in South Africa and arrive within 1–2 days, with same-day delivery available in major cities. In the South African market, shipping speed directly determines conversion rates.

Second, traffic weighting.Takealot’s algorithm is very straightforward—the faster the shipping, the higher the ranking. Products from local stores stocked in official warehouses receive 30% more exposure than those shipped directly from overseas. This means that for the same product selection, local stores naturally receive more free traffic.

Third, capital repatriation.Revenue from cross-border stores must be repatriated via a third-party payment service, which involves platform commissions, exchange rate spreads, and currency conversion fees—a series of layers of deductions. Revenue from domestic stores is deposited directly into a South African bank account, with virtually no intermediary losses.

Fourth, return costs.Due to slow shipping, a higher percentage of buyers at cross-border stores cancel their orders because they can’t wait, resulting in a significantly higher return rate than at domestic stores. The average return rate for domestic stores is only 1%–2.5%, while for cross-border stores, it often ranges from 5% to 8%.

Each of these four factors is quietly eating into your profits. Let’s take a look at the bottom line.

Let’s take Old Chen’s store as an example. It sells 3C accessories and small household goods, with an average of 15 orders per day, an average order value of about 180 rand, and annual sales of approximately 1 million rand (equivalent to about 400,000 RMB).

Let’s first exclude the costs that are the same for both types of stores—monthly rent of 4,800 rand per year and commission of 100,000 rand per year (calculated based on an average commission rate of 10%). Since these two items are identical, they will not be included in the comparison.

Focus on the variances:

Do you see it clearly now? For the same annual sales of 1 million rand, a cross-border store spends nearly118,000 rand, which is equivalent to approximately 47,000 RMB.

In other words, Old Chen’s cross-border store generated nearly 120,000 rand less in net profit per year than his domestic store.

And that’s just for a business with annual sales of 1 million. If you reach 3 million or 5 million, the gap will increase proportionally—with annual sales of 3 million, the difference is 350,000 rand (140,000 RMB); with annual sales of 5 million, the difference is nearly 600,000 rand (240,000 RMB).

The larger the scale, the more pronounced the cost disadvantage of cross-border stores becomes.

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The numbers in the table are already quite clear, but there are three cost items that many sellers don’t even realize they’re losing money on. Let’s break these down and explain them in detail.

First: The cumulative losses incurred during the process of receiving payments and exchanging currency.

The payment collection process for cross-border stores is as follows: Takealot makes a payment (in South African rand) → third-party payment provider → currency exchange → domestic bank (in RMB).

There are at least three layers of losses in this process. The first layer consists of fees charged by third-party payment platforms, amounting to approximately 3%. The second layer involves exchange rate differences—due to the slow payment cycle, exchange rates fluctuate over the course of one to two weeks, and settlements are sometimes based on the lowest rate during that period. The third layer consists of currency exchange fees and hidden exchange rate spreads.

When you add up all three tiers, out of 1 million rand in payments received, you might end up with 40,000 to 50,000 rand less in your pocket. If you lost 20,000 RMB a year for no reason, you probably wouldn’t even bat an eye.

What about the local store? The funds go directly into a South African bank account and are held in rand. When the money is needed, it’s converted all at once, keeping the loss within 0.5%.

Second: Inventory losses resulting from differences in return rates.

The 14- to 20-day shipping time for cross-border direct mail is the number one cause of high return rates. It is very common for South African buyers to lose patience and either cancel their orders or refuse delivery. Return rates for cross-border stores often range from 5% to 8%, while local stores, with delivery times of just 1–2 days, keep their return rates as low as 1% to 2.5%.

Don’t underestimate these few percentage points. With annual sales of 1 million rand, reducing the return rate from 61 TP3T to 21 TP3T can save 20,000 rand in losses from returned merchandise alone. Moreover, for cross-border stores, returns must be shipped back from South Africa to China, and the return shipping costs are often higher than the cost of the merchandise itself, forcing most sellers to simply abandon the goods.

Third: The hidden gap in traffic acquisition costs.

As mentioned earlier, domestic stores receive 30% more impressions than cross-border direct-shipping stores. What does this mean? It means that to achieve the same 10,000 impressions, cross-border stores have to spend more on advertising to make up the difference.

For Takealot’s Sponsored Products ads, the average CPC ranges from 2.5 to 5 rand. While local stores can achieve the same exposure through organic traffic, cross-border stores have to spend advertising money to make up for it. Over the course of a year, the additional advertising costs amount to 17,000 rand—and that’s just a conservative estimate.

So far, we’ve been talking about ”money saved.” But local stores also generate other benefits that can’t be directly quantified, yet yield significant compound returns over the long term.

First, the speed of payment collection was four times slower.

For cross-border direct shipping, the first payment is made 14 days after an order is delivered. Subsequent payments are made every Thursday, 72 hours after an order is delivered. This results in a cash cycle of approximately two weeks. What about domestic stores? Funds are credited within 3–4 days.

This means that with the same amount of capital, a local store can turn over its inventory several more times a year. When annual sales are 1 million, the difference isn’t very noticeable, but when annual sales reach 5 million, a fourfold difference in capital turnover efficiency can mean the difference between survival and failure.

Second, there are virtually no restrictions on product categories.

The cross-border direct shipping model has clear category restrictions—liquids cannot be shipped via direct shipping, clothing is not currently supported, and products containing batteries must have an MSDS certificate prepared in advance. Many high-margin product categories are simply off-limits to cross-border stores.

With local stores shipping from local warehouses, these restrictions are essentially nonexistent. Whether you want to sell beauty and personal care products, clothing and footwear, or electronics, you can list them all in a local store. The flexibility in product categories directly determines the upper limit of the market you can tap into.

Third, VAT compliance can be optimized.

For cross-border stores, the platform withholds and remits VAT on behalf of the seller, leaving the seller with no room for maneuver. For domestic stores, the platform withholds VAT but does not remit it; sellers must file their own returns. This means you can claim input tax credits—VAT incurred on costs such as inventory purchases, logistics, and warehousing can all be used to offset output tax.

For sellers of a certain size, VAT credits alone can result in significant annual savings. Furthermore, after registering a South African company, you can apply for tax optimization strategies such as offshore exemptions to further reduce your overall tax burden.

Fourth, brand development and asset accumulation.

No matter how big a cross-border store grows, its assets remain in the hands of the platform and third-party payment providers. With a local store, you operate through your own South African company—the bank accounts, tax records, and brand registration are all your own assets. If you ever want to sell the store or raise capital for expansion, these are the assets that truly hold value.

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That said, I’m not trying to discourage you from opening a cross-border store. Both models have their own use cases; it all depends on what stage you’re at.

If you're a complete beginner and this is your first time exploring the South African market... We recommend starting with a cross-border store to test products. It requires a small investment and can be set up quickly (in just 3 days), so use the direct shipping model to test different products and see which categories sell well in South Africa. The main goal at this stage is ”trial and error,” not ”making money.”

If you’ve successfully identified your product lineup and your monthly sales are consistently at 500 orders or more...it’s time to seriously consider switching to a domestic store. At this point, the cost disadvantages of a cross-border store begin to show; every extra month you wait means one less month of profit. The sooner you make the switch, the sooner you’ll see the benefits.

The Most Ideal PathHere’s the plan: Test products in your cross-border store for 1–2 months; once you’ve identified a bestseller, immediately start the process of registering a company in South Africa and simultaneously stock your local warehouse. Take a two-pronged approach so you don’t miss out on making money.

The entire process, from registering a South African company to launching your store on Takealot, takes approximately 4–6 weeks. Qicaiying can handle everything for you in one stop—including South African company registration, bank account opening, tax registration, onboarding with Takealot, and local warehouse integration—all without you having to make a single trip to South Africa.

The extra 110,000 rand will cover all the registration fees, account opening fees, and first-year financial and tax services for your South African company—and you’ll still have some left over.

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