They’re wrapped around South African online shopping like two Amazonian anacondas snapping at each other’s tails, but the biggest online retailers in the country are soon to be one. Today’s startling news is that Takealot.com is merging with Kalahari.com, to create a national Shopzilla of some magnitude.
Kalahari said in a statement that both companies have been suffering losses “for many years”, which is the main reason the two decided to join forces to dominate the market. Kalahari, under its parent company Naspers, has been expanding aggressively into the rest of Africa over the last while, and in May this year it was announced that Takealot has managed to secure R1-billion ($100-million) in funding from Tiger Global Management, and in August it purchased luxury goods online peddler Superbalist with part of the $100 million it received.
“After many years of losses on Kalahari and four years [of losses] on Takealot, we realise we have to work together if we are to survive and prosper. 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,” said Oliver Rippel, senior executive responsible for Kalahari.
In a joint statement, the companies said that they realised it would be beneficial to merge, as shoppers are still making use of regular shops than online retail, which makes their jobs a lot harder to keep afloat.
“The move was driven by the fact that, without scale, SA e-retailers simply can’t compete successfully against the local brick-and-mortar retailers and foreign companies such as Amazon and Alibaba.”
Takealot CEO Kim Reid said that he is understandably excited as to what the future will hold for both companies.
“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.”
Before the merger will become official, the deal will have to go through the competition commission for approval.
According to reports, both Naspers and Tiger will hold equal 41% stakes in the new entity which will continue to trade as usual throughout the Christmas period. Last year Mastercard estimated that South Africans spent R4.2bn online in 2013, and brands such as Yuppiechef are claiming 100% year on year growth.