Johannesburg – Killing off the Kalahari brand signals that South Africa’s e-commerce market may not have grown fast enough, analysts said on Monday. Gareth van Zyl
Johannesburg – Killing off the Kalahari brand signals that South Africa’s e-commerce market may not have grown fast enough, analysts said on Monday.
The Competition Commission (CompCom) in January approved a merger between local e-commerce brands Kalahari and takealot.
And this week, both e-commerce brands have announced that the Kalahari website will beclosed within a month. Fin24 understands that several Kalahari staff have been absorbed into takealot while others have found new jobs elsewhere.
US investment firm Tiger Global Management and media company Naspers [JSE:NPN] will each have an approximate 41% stake in the merged e-commerce business. Management and shareholders will own the remaining stake of the merged unit.
The folding of Kalahari into takealot is intended to boost the merged unit’s scale and supply in South Africa.
Data from measuring company Effective Measure has indicated that kalahari.com was South Africa’s biggest e-commerce website in December 2014 with 2 277 636 visitors to the site, while takealot.com had 1 737 672 visitors.
“I think they both realised one major thing: The biggest defining factor in online retail is scale,” Steven Ambrose, chief executive officer of technology research firm Strategy Worx, told Fin24.
“And neither of them independently had the scale to really perform at the sort of level that people assume the internet is capable of,” said Ambrose.
Research has indicated that the adoption level of e-commerce in South Africa is small compared to global markets.
A PricewaterhouseCoopers (PwC) survey results released earlier this year said that the value of online retail sales in South Africa is R5.3bn, which is not even 1% of total retail sales in the country. In the UK, internet sales accounted for 10.5% of department store sales, according to Statista.com.
“So, the whole promise of the growth of online retail in South Africa has been a bit of a damp squib,” Ambrose told Fin24.
“It’s not happened in the way that people anticipated or predicted it would,” he said.
In an interview with Fin24 earlier this year, takealot co-CEO Kim Reid was more upbeat about South Africa’s e-commerce market.
“The fantastic part about it is there’s an R800bn consumer retail market in South Africa today and that’s what we’re growing into. So, we’re not creating a new market; we’re basically feeding off that existing retail market,” he said.
Tapping an existing retail market, though, could be a challenge for South African e-commerce businesses that need large internet audiences.
South Africa’s number of internet users is expected to hit a “conservative estimate” of 18.5 million during 2015, according to research released by World Wide Worx Managing Director Arthur Goldstuck earlier this year. South Africa has a total population of just over 50 million.
Goldstuck in his research also noted that less than a million people are buying virtual products in South Africa – a sign pointing to low e-commerce participation levels in the country.
“In South Africa, how many people have access to online communications? How many people are enabled from a technology perspective to actually use e-commerce?” Mark Walker, the regional director for Sub-Saharan Africa at the International Data Corporation (IDC), told Fin24.
“There’s an access inhibitor,” Walker said.
“Also, it’s not only physical access or access via devices. It’s also the ability to spend online,” added Walker.
For instance, Walker said access to credit cards is a key requirement for numerous online shopping portals.
Yet statistics released by Kalahari in 2011 indicated that South Africa at that stage only had a 16.7% credit card penetration rate.
Walker further told Fin24 that the Kalahari-takealot merger poses questions about consolidation in the e-commerce space.
He said the trend globally is for smaller e-commerce firms to start operations and then possibly get merged or acquired into other businesses.
“It’s a scramble in the beginning. The most successful guys win out for that region or country. And then they will consolidate upward…to various holdings and mergers and acquisitions and so on,” Walker told Fin24.
“It can lead to all kinds of preferential agreements, arrangements.
“It cuts a lot of those smaller players out of the market,” Walker said.
Other analysts, though, have pointed out the potential positive benefits that a Kalahari-takealot merger can have for consumers.
“The merger is a positive development, as it takes an up-and-coming, creative and dynamic brand in takealot, and gives it the depth of customer base and history of an older brand that has appeared unable to innovate or shake off the drag of its legacy systems,” Goldstuck told Fin24 on Monday.
“The customers of both services win. It is also good for the industry, as it presents an opportunity for a truly stand-out retail e-commerce business in an environment where previously only larger airlines like kulula.com and smaller niche players like YuppieChef, Netflorist and Cape Union Mart seemed to have got it right,” said Goldstuck.
In the meantime, preparations are under way to close the Kalahari website and brand as takealot has launched a section on its site explaining how customers will be affected by the change.
It is unclear when exactly kalahari.com will close, but this is said to happen within the next month, marking the end an era for a brand that started in 1998 selling books, music and VHS titles.
Data journalism takes top prize in revamped awards
The entries to the 2018 Vodacom Journalist of the Year Awards were extraordinarily varied and of an excellent standard, with new categories introduced which are based on content as opposed to platforms. This year, the judges decided that two entries were equally worthy of the coveted Vodacom Journalist of the Year Award.
The first co-winning entry, in the new Data Journalism category, is a set of stories by Alastair Otter and Laura Grant of Media Hack which showed how Data Journalism is shaping the future. The second co-winning entrant is Bongani Fuzile of the Daily Dispatch for his articles in the investigative category on how migrant workers were being ripped off by pension deductions (full citations below).
Convenor of the judging panel Ryland Fisher says: “This year we modernised the 12 categories that journalists could enter their work in and the change was embraced by entrants. In a turbulent time for media, the 2018 entries once again proved that there are excellent South African journalists delivering praiseworthy work, and we commend them for finding new and innovative ways to cover the news.”
Takalani Netshitenzhe, Chief Officer for Corporate Affairs at the Vodacom Group, says: “Vodacom is proud of its 17-year association with these prestigious awards, which make an important contribution to our society through the recognition of journalistic excellence. I’d like to congratulate all of tonight’s winners and, as always, I’d like to pay tribute to our hardworking judges. Ryland Fisher, Mathatha Tsedu, Arthur Goldstuck, Collin Nxumalo, Elna Rossouw, Patricia McCracken, Megan Rusi, Mary Papayya, Albe Grobbelaar and Obed Zilwa: thank you for making these awards a continued success.”
Veteran journalist and media stalwart Ms Amina Frense is the winner of the 2018 Vodacom Journalist of the Year Lifetime Achiever Award. She has spent decades in mainstream media both locally and internationally. She is a former Managing Editor: News and Current Affairs at the SA Broadcasting Corporation. She has worked in many countries abroad as a producer and a foreign correspondent, has written two books and is also a founding member of SANEF where she still serves as a council member (full citation below).
The overall winners share the R100 000 main prize. National winners in the various categories are as follows, with each winner taking home R10 000:
The entries in this category were of an exceptionally high standard. One entrant stood out and became the unanimous winner. This journalist showed an exceptional skill for story-telling and for finding unexpected angles and unknown facts. For his stories about Musangwe’s fight for recognition, Age cheating in SA football, and Hansie Cronje revisited, the winner is Ronald Masinda, and the team of Gift Kganyago, Nceba Ntlanganiso and Charles Lombard from eSAT TV.
Cons exploit Telegram ICO
Kaspersky Lab researchers have uncovered dozens of highly convincing fake websites claiming to be investment sites for an initial coin offering (ICO) by the Telegram messaging service. Many of these websites appear to belong to the same group. In one case alone, tens of thousands of US dollars’ worth of cryptocurrency were stolen from victims believing they were investing in ‘Grams’, Telegram’s rumoured new currency. Telegram has not officially confirmed an ICO and has warned people about fraudulent investor sites.
In late 2017, stories started to circulate that the Telegram messaging service was launching an initial coin offering (ICO) to finance a blockchain platform based on its TON (Telegram Open Network) technology. Unverified technical documentation was posted online, but there appears to have been no confirmation from Telegram itself. The resulting confusion seems to have allowed fraudsters to capitalise on investor interest by creating fake sites and stealing vast sums of money.
Kaspersky Lab researchers have discovered dozens of such sites, possibly belonging to the same group, claiming to sell tokens for ‘Grams’ and inviting investors to pay with cryptocurrencies including Bitcoin, Ethereum, lice litecoin, dash and Bitcoin dash. A record of transactions on one site revealed that the scammers were able to steal at least $35,000 US dollars’ worth of Ethereum from investors.
The researchers found that some of the websites were so convincing that even after Telegram and others began to issue warnings, they were still able to recruit potential investors. Most use a secure connection, require registration and generate a unique online wallet for each new victim, making it harder to track the money.
Judging by the content of the fake websites, it appears they may have common ownership. For example, several have the exactly the same ‘Our Team’ section.
“ICOs are a fairly risky investment and many people don’t yet fully understand how they work, so it is not surprising that high quality fake websites, with seemingly reassuring features such as a secure connection and registration are successful at luring people in. People wishing to invest in an ICO would do well to check with the company behind it and make sure they know exactly who they are giving their money to, or they may never see it again,” said Nadezhda Demidova, Lead Web-Content Analyst, Kaspersky Lab.
Kaspersky Lab offers the following advice for users considering investing in an ICO:
- Check for warning signs: for example, some of the fake Telegram ICO websites had the same wrong image next to the name of Telegram’s Chief Product Officer.
- Do your homework: always check with the brand’s official site to verify the legitimacy of the investment site and, if necessary contact the company’s ICO teams before investing any money or currency.
- Use reliable security solutions such as Kaspersky Internet Security and Kaspersky Internet Security for Android, which will warn you if you try to visit fake internet pages.