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Kalahari takes leaf out of Amazon

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Kalahari.net has followed its international competitors' example, setting up a third-party marketplace as a means of expanding its online offerings.

The local site's offering, Marketplace, is similar in concept to those of Amazon.com and Barnes & Noble; however, it is not a bid system such as eBay.

A seller can download information about the product being sold with an asking price. A buyer makes a purchase by putting the money into an escrow account held by Kalahari and then, once the product is received, the money is released to the seller.

Kalahari currently does not take a cut or commission from the sale, but that policy will change in September, based on the success of the transaction.

Accountable sales

Kalahari GM Gary Novitzkas says others have found third-party sales can account for as much as 25% of their top line revenue streams, and also has the added benefit of expanding the list of offerings beyond which a retailer would economically be able to hold.

Sellers could be ordinary people selling second-hand goods, or companies offering various products or services. Categories are the traditional books, movies, games and music selections, but this will be expanded, with electronics expected to be added around September.

“Online third-party sales have a tendency to create niches and then sub-niches. We were amazed that during our beta phase, cookery books became a very active section,” Novitzkas says.

A review mechanism using a five-star system will rate buyer experience and, if a seller is found to be continuously troublesome, their account will be barred.

Novitzkas says the company's legal department was still finding ways to profile or vet potential sellers in order to limit the chances of stolen or illegal goods being sold.

He says Kalahari hopes to leverage the good name it has developed in the marketplace. A great advantage of a system such as this is that it will be trusted, local (although with international contributors), and able to offer far more items than a traditional reseller, he notes.

Novitzkas says the offering accounts for less than 2% of Kalahari's current revenue and has more than 3 500 registered sellers. Some 700 000 unique impressions are registered on the site monthly and about 10% are turned into sales.

He says plans are to have at least 100 000 registered sellers by year-end.

The Kalahari system is based on a Microsoft .Net Java platform and has been in development since February.

Novitzkas says the platform will undergo further development and refinement in the future.

He says US online retail giant Amazon's decision to open a client service centre in Cape Town is good news, and the creation of Marketplace is not a reaction to it.

“Cape Town is developing a name for itself as an online retail hub and that is really good.”

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