South African e-commerce rivals merge against Alibaba

south-africa

Longstanding e-commerce rivals Takealot and Kalahari are merging to defend the South African market from overseas rivals such as Alibaba and Amazon.

The value of the deal has not yet been disclosed, and is still subject to Competition Commission approval before becoming effective.

Kalahar.com, owned by JSE-listed media and e-commerce group Naspers, will be folded into Takealot.com, which recently secured US$100m from investment firm Tiger Global Management. Naspers will acquire shares from Tiger Global so that each company will hold about 41 per cent of the merged business.

Online retail only counts for 1.3 per cent of the total market for consumer goods in South Africa, whereas in developed markets such as the UK and US, e-commerce counts for as much as 40 per cent.

By merging, Takealot and Kalahari hope to prevent further losses, and encourage more e-commerce spending. So far, high broadband costs have impeded the speed of growth in local online shoppers.

“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,” said Oliver Rippel, senior executive responsible for Kalahari.

But together, the new merged business faces larger challenges – the threat of foreign giants Alibaba and Amazon, who do not pay tax in South Africa, creating an uneven playing field for local companies.

“The move was driven by the fact that, without scale, South African e-retailers simply can’t compete successfully against the local brick-and-mortar retailers and foreign companies such as Amazon and Alibaba,” the companies said in a statement.

Kim Reid will manage the merged entity under the Takealot brand together with co-CEO and chief technology officer Willem van Biljon.

“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,” said Reid.

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