The demise of Kalahari.com

South Africa's two largest online retailers say they are merging to combat the onslaught of foreign giants. But the merger will mean the end of Kalahari.com.

Together, Kalahari.com and Takealot.com have a slightly bigger market share than Amazon.com in this country.

But the merger, announced yesterday, will mean trimming the fat, as Kalahari will be absorbed by Takealot.

Takealot CEO Kim Reid will manage the new entity jointly with Takealot colleague Willem van Biljon.

Reid said there would be "overlaps that will need to be dealt with post approval of the transaction" by the competition authorities.

The e-tail market in this country is tiny, accounting for only 1.3% of the entire consumer goods market.

Amazon has been clawing its way into the market, capturing a third of it.

After Chinese giant Alibaba raked in more than R220-billion on its listing in the US a few weeks ago, many fear it might set its sights on emerging markets, including South Africa.

"Neither of these entities has a physical presence here as yet, but Amazon does have a very large share of the e-book market in South Africa," said Kalahari CEO Caren Genthner-Kappesz.

Kalahari has been making losses for many years and Takealot for the past four years, the companies said yesterday.

"If we don't join forces we will have a tough time surviving," Genthner-Kappesz said.

Though Kalahari's share of the market is still slightly bigger and the company has been around for much longer, Takealot has built up plenty of momentum in recent years. In May it was announced that Takealot would be given a R1-billion injection by Tiger Capital Management. Tiger acquired the e-tailer in 2011.

Naspers owns Kalahari.

"Tiger Global and Naspers will each have approximately 41% in the merged entity, with the remainder being owned by minority shareholders," Reid said.

But not only the foreign e-tailers are a threat, the likes of Woolworths and Massmart are also moving into the space.

"As a local player, we need to ready ourselves not only for increased competition from international players but also the local brick-and-mortar stores that are increasingly operating online," Genthner-Kappesz said.