With the Competition Commission clearing the way for the merger between online retailers Takealot and Kalahari, online media has been abuzz with reaction to the news that the Kalahari brand would eventually cease to exist.
While most commentators seemed baffled and even upset by the imminent demise of the Kalahari brand, Takealot founder and co-CEO Kim Reid says there is strategic thinking behind the move.
"The decision is probably surprising to some, given that the Kalahari brand has been around for some time, but over the past 12 months, the Takealot business has gained strong momentum, more so than Kalahari," he says.
"We believe that the Takealot platform and name are best suited as the foundation and brand for the combined business. Ultimately, the brand name is far less important than the qualities associated with the brand. Our aim is to ensure that the merged entity and the Takealot brand remain synonymous with great prices and great service."
The merger was initially announced in October last year, with the companies saying at the time "the move was driven by the fact that, without scale, SA e-tailers simply can't compete successfully against the local brick-and-mortar retailers and foreign companies such as Amazon and Alibaba".
The deal will become effective on 1 February, with Tiger Global and Naspers each holding a 41% stake in the combined entity, and the remainder being held by Takealot management and minority interests.
As for the discontinuation of the Kalahari brand, Reid says from 1 February, the Kalahari site will not accept new registrations. "Existing Kalahari customers can continue to shop on Kalahari.com until further notice," he adds.
Reid says the rationale for the transaction is to create an efficient platform of scale, essential to succeed in retail and to compete effectively against both local brick-and-mortar retailers and offshore e-tailers.
"At Takealot, we always strive to put the customer first. This will be no different in the merged entity and will be our primary focus as we merge and continue to build the business. We believe that placing the customer at the centre of our decision-making is the best business strategy to follow to build a large, sustainable retail entity," says Reid.
"This is a necessary step in the evolution of online retail in SA and exciting news. The South African e-tail market is a highly dynamic one, and we foresee significant growth in the future," Oliver Rippel, senior executive responsible for Kalahari, stated previously.
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