SA online retailers Kalahari and Takealot to merge

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Two of South Africa’s largest online retailers, Kalahari and Takealot have announced they intend to combine forces and merge their operations. In a statement released on Tuesday morning the companies say the move has been prompted by the fact that local online retailers need scale in order to realistically compete in the local market against conventional retailers and against international rivals like Amazon.

Takealot-logo“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,” say 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.”

Though online retail has grown in South Africa in recent years it still accounts for a tiny share of the consumer goods market. According to the companies, online retail accounts for less than 1.5% of the market in South Africa, compared to markets like the US and UK where as much as 14% of consumer goods are purchased online

Naturally, both Kalahari and Takealot argue that combining forces will benefit consumers by providing them with more products from which to choose and a wider range of delivery options.

“We are very excited about this transaction and the efficiencies and scale that it can generate for the merged business,” says Takelot CEO Kim Reid. “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.”

Reid will manage the new, merged entity under the Takealot brand alongside co-CEO and CTO Willem van Biljon.

The Competition Commission will have to sign off on the merger before it comes into effect. Until then the companies will continue to trade separately.

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