MIH internet is closing down two of its African e-commerce sites, Kalahari Kenya and Kalahari Nigeria due to a lack of profitability.
The decision to discontinue the sites follows a “strategic review” of MIH’s investment priorities. In a statement on dealfish.co.ke the company’s GM of e-commerce in Sub-Saharan Africa for MIH, Stefan Magdalinski, said “the performance of the service has been below expectation since launch and reaching profitability was not a reasonable near-term prospect”.
As from 19 October no new orders were being taken, and the sites now hope to complete delivery of current open orders. A notice of closure has been sent to all employees of the two sites.
Kalahari Kenya and Kalahari Nigeria were launched by MIH in October 2009 and January 2010, respectively. The group says it will now refocus its efforts on the like of Dealfish and Mocality – a site that provides group buying deals and also claims to be Kenya’s largest business directory.
According to ITWeb, analysts have attributed the Kalahari sites’ failure to high operational and marketing costs – reports are that advertising in the two markets alone cost the company around $50 000. While the site boasted 14 million users and three million products, costs of pan-African delivery and advertising seem to have taken their toll.
Persuading Kenyans to trust online shopping has also been a stumbling block, with many consumers opting to use sites only for products that they are unable to physically buy. In addition, credit card uptake in Kenya still low and mobile-to-Web payment systems, like PesaPal, are yet to gain mass acceptance.