Kalahari.com and Takealot.com, South Africa’s two largest online retailers, announced in a press release on Tuesday, 7 October 2014 that they are merging their operations.
The two companies said the move was driven by the fact that, without scale, online retails in South Africa simply can’t successfully compete against the local brick and mortar retailers and foreign companies such as Amazon and Alibaba.
“After many years of losses on Kalahari and 4 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”.
According to the two retailers, online retail only accounts for approximately 1.3% of the total market for consumer goods in South Africa.
However, they added that the channel has great 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.
Kalahari and Takealot promised that the merger will bring customers the benefit of a wider selection of products and categories, as well as broader delivery services.
Takealot CEO Kim Reid will manage the merged entity under the Takealot brand, together with his co-CEO and CTO Willem van Biljon.
“We are very excited about this transaction and the efficiencies and scale that it can generate for the merged business,” Reid said. “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.”
The merger is subject to Competition Commission approval and will only become effective once the Commission has ruled. The businesses will continue to trade separately and service their customers as usual through the festive season.