Takealot and Amazon’s overpriced product problem

Takealot and Amazon take vastly different approaches to dealing with sellers listing products at inflated prices.

Taken at face value, it would appear that Takealot’s approach is less consumer-friendly.

However, there may be a very good reason why the company is unable to protect consumers from price gouging — a 2023 ruling by the Competition Commission.

MyBroadband recently received a complaint from a reader regarding Takealot support’s response to a listing for a PlayStation 5 bundle priced at R39,999, supposedly discounted from R69,990.

The bundle included the console and controller and three games — Lego Star Wars: The Skywalker Saga, Cricket 22, and Let’s Sing with two microphones.

MyBroadband calculated the combined cost of these products from one of the biggest PlayStation product retailers in South Africa was R15,596.

That means the offer was over 2.5 times — or 150% — more expensive than what the products typically sold for. The listing price was also around 4.5 times — or 350% — higher.

Historical price tracking website Serval Tracker revealed that when the product was first listed, it was priced at R13,999, discounted from R16,999.

However, these numbers changed to the latest pricing on 28 November 2024, where they remained until early March 2025.

When the customer contacted Takealot support to flag the product, they were simply told that sellers were allowed to set their prices.

MyBroadband subsequently discovered another listing for a PS5 bundle with two games and a choice of either magenta or purple sideplates, which was priced at R39,900.

We asked Takealot for its official policy around overpricing or price gouging and provided the complainant’s spotted product as an example but it did not respond to our query by the time of publication.

However, one of the listings was taken down shortly after our request for comment, while the other was marked as “Out of Stock” with a new price of R14,900.

Takealot shoppers have long accused the company of allowing its sellers to post misleading prices, although this has primarily been through overstated discounts rather than outright overpricing.

When a product is available at a reduced price, it will have a crossed-out listing price, which is meant to reflect pricing on the market or a recommended retail price.

There have been numerous cases where the listing price far exceeded prices on the market.

This results in the discount of a product being completely overstated. In some cases, the offer price is the same or close to market prices but is distorted to reflect a false saving.

Takealot previously suspended two third-party sellers who charged more than double for Gizzu portable power stations in 2022, when load-shedding was at its worst and customers were desperate for backup energy solutions.

Syntech’s co-founder and sales director Ryan Martyn previously told Daily Maverick that sellers were not allowed to set prices for items above 20% of the lowest offer with stock on its marketplace.

However, it is not clear what rule Takealot applies if a listing is unique and no other seller on its marketplace offers that product.

How Amazon punishes overpricing

MyBroadband asked Takealot’s potential biggest rival in South Africa — Amazon — how it approached overpricing.

The company told MyBroadband it has zero tolerance for price gouging, which includes strongly and overtly discouraging sellers from listing products at prices that are out of touch with the market.

While it also allows third-party sellers to set their own prices, its “customer obsession” philosophy emphasises low prices and customer service.

“We have a longstanding policy that prohibits pricing practices that may harm customer trust, and we closely monitor our store to ensure compliance,” the retailer told MyBroadband.

“If we identify a price that violates our policy, we remove the offer and notify the seller immediately. This is to protect customers and ensure products in our store remain fairly priced.”

Amazon also offers its sellers tools to help them offer competitive prices to boost their sales.

“As a result, the vast majority of the thousands of products with a featured offer are priced competitively,” the retailer said.

One practice to avoid price gouging that has upset some Amazon.co.za sellers is removing the “Add to Basket” button from a product appearing on the home page or search results if Amazon finds it is priced better on another website.

One seller found that every time he lowered his price on Takealot but not on Amazon, the retailer would remove the button and suggest pricing the product at the Takealot price.

While customers can still buy the item, they must click or tap on the listing before they can add it to their cart.

Amazon also evaluates all competing Amazon retail and third-party seller offers to highlight the listing it believes customers would choose if they compared all offers in detail.

Takealot does something similar through its Buy Box, which highlights the best offer for the same product.

However, it does not compare the pricing of products without multiple listings with external retailers or competition, like Amazon does.

A possible reason for this is that the Competition Commission’s Online Intermediation Platforms Market Inquiry ruled that Takealot must scrap its “narrow price parity” clause in seller contracts.

This rule prevented sellers from pricing their products lower on their own websites, making it difficult to reduce their reliance on Takealot.

Takealot argued the clause was aimed at ensuring its customers were not being overcharged for items on its platform.

As the company is no longer allowed to do this, Takealot’s ability to punish price gouging has been inhibited. It must now develop other systems and rely on customer reports to flag exploitative sellers.

While Amazon had not yet launched in South Africa at the time of the inquiry, the commission warned the same rules would apply to the e-commerce giant.

However, it could be that removing the “Add to Basket” button is a less severe punishment than what Takealot did for sellers who violated its “narrow price parity” clause.