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South African MIH to Close Down Kenyan Kalahari E-Commerce Site Print E-mail
Thursday, 27 October 2011
In a brief notice on the Dealfish.co.ke website, South African MIH announced that they would discontinue their e-commerce Kalahari sites in Kenya and Nigeria. Kalahari had been modeled on the early version of e-tailer Amazon, offering books, DVDs and music. Kalahari had been launched in Kenya in 2009 and in Nigeria in 2010.

MIH cite a ‘strategic review of its investment priorities’ as the reasons to discontinue the e-commerce sites: In an interview with the Kenyan Standard, Stefan Magdalinski, MIH’s General Manager, E-commerce, Sub-Saharan Africa, said that ‘the performance of the service has been below expectation since launch and reaching profitability was not a reasonable near-term prospect’.

MIH say that both Dealfish and online business directory Mocality will continue to operate. However, classifieds site dealfish.co.ke may also come under pressure by the recent launch of the free Google Trader classifieds platform in Kenya (see News Analysis: Google Trader Launch - Bad News for Local Classifieds Sites?). MIH is part of South African Naspers whose print arm, Media24, also discontinued its Kenyan operations that had published a portfolio of lifestyle magazines including Adam, Twende, True Love and Drum.

South African firms often seem to have a difficult time establishing successful operations in Kenya. The Kenyan market has a number of characteristics to support e-commerce, including a pioneering and very popular mobile money service and several payment aggregators that can channel mobile payments, but also credit card payments to e-tailers. Mobile operators now offer pre-paid Visa (Safaricom) and Mastercards (Airtel). In addition, internet penetration is relatively high by sub-Saharan African standards.

However, any e-tailer, especially in the classic Amazon products - books, videos, music – will face challenges in a limited reading culture, competition from international e-commerce sites (now even more accessible with pre-paid cards), a vast range of cheap pirated DVDs, and downloads of books, movies and music. In addition, local infrastructure constraints make deliveries costlier



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