Telkom’s ADSL monopoly crippled eCommerce in South Africa

eCommerce in South Africa has been slower than other regions of the world because of Telkom’s ADSL monopoly. This is according to Takealot CEO Kim Reid.

“If you speak to the younger generation [in South Africa], Internet is like water,” said Reid.

Speak to someone of his generation and, unless they’ve been overseas and experienced uncapped bandwidth, their thought process immediately goes to “caps” and “data costs me money”, said Reid.

This is because of where we come from as a country, with high bandwidth pricing and low Internet penetration, he said.

Monopolies are dangerous

Mentioning the word “monopoly” in the context of Takealot growing to dominate certain product categories also evokes a strong response from Reid.

“We definitely don’t want to be a monopoly, because monopolies are dangerous.”

While they do have advantages in certain product categories, such as books, if big local market changes causes brick and mortar stores to close, Reid said South Africa is a highly-competitive retail market.

Competitors often source products from the same places, he added.

Broadband landscape changing

Broadband penetration is always an issue in this country for online businesses, said Reid.

While the roll-out fibre is changing the landscape with regards to fixed-line speeds and prices, Reid said cheaper mobile data would boost Takealot’s growth.

It won’t be a massive boost, but it would help, he said.

Reid was asked whether Takealot is looking at brokering deals with mobile operators to zero-rate data used to browse Takealot, but he declined to comment.

“Mobile operators are notoriously difficult to deal with,” he said.

Now read: What Takealot plans to do with its R960-million cash injection

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Telkom’s ADSL monopoly crippled eCommerce in South Africa