Online retailer Kalahari.net is arguably one of the best examples of local e-tail success. Under the guidance of GM Hein Pretorius, the e-tailer expanded from an online bookshop launched in 1999, to an aggregated offering that includes videos and DVDs, wine and computerware.
It recently launched a music shop - an offering around which the company has repositioned its key offerings.
If there`s one thing most South Africans will remember about Kalahari.net, it`s the fact that its radio campaign features advertising in the tongue of the Kalahari - Khoi. But that`s about the only above the line advertising one is likely to see from the M-Web subsidiary.
"We had advertising on iafrica.com and msn.co.za, and we did quite extensive database marketing to existing customers; it was very much concentrated probably more below the line than above," says Hadfield.
The focused approach has paid off -- since the beginning of the campaign roughly two weeks ago, Hadfield says, the number of first time visitors to the site has increased by 271% over the average forecasts. New customers grew by almost 149%, while sales in the music shop specifically are up 300%.
Hitting the right note
Kalahari.net expects big things from the music shop -- it currently has what it believes to be the largest online Afrikaans music selection, and as Hadfield notes, the e-tailer would like to see it generating at least 10% of revenue going forward.
There was a seismic shift in consumer behaviour last year, and that`s definitely affected the culture to pay
Gary Hadfield, marketing manager, Kalahari.net
"One of the key success factors, the key thing we wanted to reposition, in terms of the market, but also within our customers` minds, is that we basically went from a shop carrying about 5 000 titles, to at present, 50 000 titles. So it`s a substantial change. In essence, it was a very small offering, and mostly local, and now we`re looking at a big local and big international mix, from the music perspective."
Another exciting development that`s resulted from the refocus, he says, is the close involvement on the side of both the major and independent record companies. The extent to which the music industry has been involved is encouraging, says Hadfield.
The music shop is the result of close to nine months` worth of work, and it`s clear that Kalahari.net expects more from the sale of CDs than it does from digital music downloads through another sister company, friedjam.com.
Though it operates as a separate entity, friedjam.com is in essence part of Kalahari.net. However, its performance leaves something to be desired.
"The thrust is the physical, in terms of turnover at this stage of the game. The key thing there is what happened in the market last year with Napster creating the culture of free music downloads. There was a seismic shift in consumer behaviour last year, and that`s definitely affected the culture to pay."
It`s a malady not peculiar just to friedjam.com, Hadfield says.
"[Most] digital download initiatives globally are struggling to find the model that works. One can strive for the model, but [its success is dependent on] consumers deciding that they are willing to pay. Affordability is not the issues -- it`s culture, and bandwidth availability. It`s not really consumer friendly, and that`s why our focus is more on the physical."
Selling bytes
Another section of the business that is performing well within expectations is the computerware shop, revitalised by the April 2001 acquisition of Jellybean.co.za.
"It definitely brought us more customers on board, and we`re happy with the performance in that area. There were benefits from the supplier relationship perspective that we capitalised on."
Keeping it in the family, Kalahari.net recently began offering alternative payment methods through another sister initiative -- icanonline. For Hadfield, this means a key inhibitor to e-commerce -- the limited penetration of credit cards in Kalahari.net`s target market -- has been addressed.
The e-tailer is in discussion with eBucks.com to pursue a similar solution.
"Going forward, the company will be looking for alliances and partnerships within the group, naturally, but we`re e-tailers and we definitely need other strategic partners outside the group."
Hadfield says that for now, the product expansion is done. The company will focus on developing existing offerings, but there is little chance that it will be selling pet food or flowers in months to come.
Summing up the company philosophy that he says is key to Kalahari.net`s ongoing success, Hadfield comments: "We move at the speed of the Internet, but we apply bricks-and-mortar fiscal discipline. We don`t have a never-ending flow of money; we have budgets, and we have to watch ourselves. The key is to manage customer expectation."
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