Allan Gray of Allan Gray Limited

Kalahari.net is synonymous with convenience, service and range, offering everything from DVD's, music and books to wine, software and PC games. We spoke to CEO Hein Pretorius to find out the secret of this online portal's success in the wake of the many dot.com failures...

Q: Did you model it on Amazon.com?
A: Initially it was modelled on Amazon, but we very quickly realised that over-diversification would not be the key to us building a successful online venture in SA. We then refined the model and became a "head shop" merchant, focusing on products with emotional and or sensory connotations, i.e. audio, visual, taste, smell, etc. This defined our core product range as being books, music, videos/DVDs, computerware and wine.

Q: What was the initial aim of the venture?
A: The initial aim is still the same as our vision today, which is to create the largest active e-tailing customer base in South Africa through servicing previously neglected market segments.

Q: How did you go about setting the site up, what products did you initially decide to try sell, how long did the whole process take?
A: We started off with selling books and a few music and video titles. The initial set-up took about 6 months as we had to get all the products into electronic formats to be able to sell them on the Internet. Kalahari virtually created the first electronic databases for books in South Africa. We then moved on to create the first electronic database for music in SA and then later also the DVD/Video databases in SA. We have become much more sophisticated since then and today we have various partnerships with suppliers of electronic product data.

Q: Tell me more about the whole start-up process from start to finish?
A: First of all we had to create the site, which included transforming physical product into electronic data, copywriting and marketing & design aspects. Behind this we had to establish product and customer databases and of course payment gateways linked to the banks. We had to set-up a
customer service center and a logistics department handling the various suppliers and the logistics through our warehouse. Most importantly we had to get suppliers on board, locally and internationally. That was just the beginning.
Then there was the creation of effective business processes within the organisation to allow for a customer centric approach to everything we do. We have automated many of our processes and are continuing to do so. Today we have over 300 suppliers electronically connected to us, allowing us
automated product updates and stock positions within their warehouses situated locally and internationally. In addition to this we also have a corporate e-trader network of over 700 organisations, which allow for electronic trading from their portals into ours.
With this we had to design a marketing strategy through which we not only launched the business, but also attracted the customer segments we were targeting. And then we had to deliver on our promises to retain the acquired customers through which we could build a solid foundation to move
forward.
We continually evolve with the dynamic requirements of our customers and thus we are continuously improving the depth and breadth of our product offerings. Today we offer over 2 million products. We also continuously improve the value we deliver to our customers, constantly seeking to expand the boundaries of outrageous service!

Q: What sort of pitfalls did you face when starting up? How did you deal with these?
A: Any start-up faces major pitfalls. They are numerous, but we will just highlight the main ones.

Q: Tell me about your competition. How do you keep ahead of the game?
A: Our largest competition today is still Amazon. It is hard to compete against them from a technological perspective, so we are competing on a service front and we are beating them. In October 2001, our customer base surpassed that of Amazon's in South Africa. Our other competition is more on the traditional retail front, such as Exclusive Books, Musica, Look & Listen. We understand our market and customers intimately and the correct use of this knowledge will always allow us to stay ahead of the pack.

Q: How did you market the site initially? And now? What was the initial reaction to the site?
A: When the big launch took place in October 2000, we went onto TV and did some very creative advertising. In 2001 we exclusively used radio to great effect and acquired a considerable customer base through this medium. In conjunction with this we have a very strong electronic communication
campaign with our customers. Today we use a combination of radio and TV to acquire new customers and our highly effective newsletter communication to keep our customers informed.
We also have an e-trader network of over 700 corporates through which we continuously market our products, amongst these are the portals - who play a vital role in our marketing strategy - the likes of m-web, worldonline, msn, news24 and icanonline.

Q: There has been a lot of talk about the whole dot.com phenomenon, and how many of those initial companies failed. How did you manage to stay alive?
A: By sticking to the basics. We have never tried to be too smart and one of our most basic principles in the business is "at least deliver what you promise". We have a great culture in Kalahari where anyone challenges the status quo to ensure that we are continuously improving. We also survived due to the great guts and determination of the wonderful people working in this organisation.

Q: Tell me about some of your successes?
A: Our main successes were:

	·	Christmas 2000 - we had our first R1million month.
	·	Jan, Feb and March 2001 being bigger months than the festive season.
	·	Christmas 2002 - doing more turnover per day than we had previously done in a week.
	·	The first e-mail from a customer thanking us for our exceptional service.
	·	The first e-mail from a customer congratulating our copywriters on their magnificent newsletters.
	·	The combination of an exceptional management team and the greatest culture any company could ever hope for.

Q: What sort of advice would you offer to aspiring entrepreneurs, particularly those wanting to move their businesses online?
A: I would offer the following advice:

	·	Make sure you intimately understand the market you want to be involved in.
	·	Understand what the business entails from start to finish (on-line models are sometimes more complicated than they might appear).
	·	Make sure the business is designed and set-up with the customers being the centre of your entire universe and reason for living.
	·	Above all, make absolutely sure you have the right people with the right expertise and mindsets on board.

Q: Tell me a little about the people behind Kalahari.net?
A: I have already mentioned the fantastic team of dedicated staff who all go the extra mile for the customer. That is not to say that we are all work and no play. We regularily take time out to get together socially and to let off some steam - paintball, go-kart racing, tenpin bowling and the like. A punching bag to relieve stress is a favourite amongst the staff.
The management team consist of five individuals who all bring their unique strengths and expertise that has contributed to the success kalahari.net enjoys today - Andre de la Harpe (our ops manager) , Susan van der Schiyf (product development manager), Gary Hadfield (marketing manager) and Samantha Alexander (finance manager).

Q: What is the way forward for Kalahari.net?
A: Kalahari will continue to evolve, especially in servicing more niche markets, previously disregarded. We will continue to defy the service barriers and constantly challenge those organisations that only offer lip service, through the delivery of excellence, as expected by our customers.

We would like to thank Mr Pretorius for taking the time to answer our questions.

	·	Credibility with suppliers - when you start out, suppliers are not that quick to jump on your train and ride into the unknown future. You need to establish credibility through delivering on your business plan and vision, step-by-step, as sold and promised. As with any business, building the relationships with our suppliers have become key and are very valuable to us today.
	·	"E-commerceability" of players in South Africa - this was a major stumbling block in the beginning. We were building an e-commerce venture, through which we obviously wanted as much done electronically as possible. Unfortunately many systems in South Africa and even some in the UK were just not e-commerceable at the time. It is frustrating to build something electronic when everything else is manual. It adds many risks to your business and of course has a major impact on how you service your customers.
	·	Supply Chain - In the beginning our supply chain was dismal, to say the least, and we disappointed many customers with absolute shocking service. We had to learn these lessons the hard way and we quickly corrected these through having the correct people on board.
	·	Thinking technology could solve everything and realising only people make a difference.