Two of South Africa’s most successful ecommerce stores, Takealot and Naspers-owned Kalahari, have just announced its merger of operations. This move is said to bring customers the benefit of a wider selection of products and categories, as well as broader delivery services.
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According to the media release, the merger was driven by the fact that, without scale, local ecommerce stores simply can’t compete successfully against the local brick and mortar retailers, as well as foreign companies such as Amazon and Alibaba.
Online retail only is said to account for approximately 1.3% of the total market for consumer goods in South Africa. The channel has great upside potential when one considers that in developed markets like the US and the UK online retail accounts for as much as 14% of total retail of consumer goods.
In May this year Takealot received a massive investment of US$100-million from Tiger Global Management. Just more than a month after Takealot acquired design outfit Superbalist, highlighting the company’s massive appetite.
“After many years of losses on Kalahari and four years on Takealot, we realise we have to work together if we are to survive and prosper”, said Oliver Rippel, senior executive responsible for Kalahari. “If you also take into account an uneven playing field against foreign operators who do not pay tax in South Africa, and the fact that high broadband costs are impeding the speed of growth in local online shoppers, combining forces gives us a better chance of success”.
Takealot CEO Kim Reid, who will manage the merged entity under the Takealot brand together with Co-CEO and CTO Willem van Biljon, says that customer satisfaction will be its prime focus going forward:
We are very excited about this transaction and the efficiencies and scale that it can generate for the merged business. We will continue to make sure that our primary focus is on the customers of the merged entity as they are the life blood of our business.
Interestingly, South African Ecommerce Awards dubbed Kalahari the country’s favorite ecommerce site in September this year, with the first runner-up being Takealot.