Zinox group has just acquired Konga.com. RetailInfo had a brief chat with Joseph Ebata, President of Bervidson Retail Group to get his thoughts about the acquisition.
Zinox Group has just acquired Konga.com. What is you take on the acquisition?
Acquisition can be a faster, cheaper, and generally more efficient shortcut to growth for companies of any size. The risk is smaller, and the financing is easier.
In the case of Zinox acquisition of Konga, there are lots of benefit for Zinox owners of Yudala, Nigeria first connected commerce platform. With Zinox group (owners of TD – West Africa’s largest distributors of computers/ laptops, Yudala – a connected commerce platform) it is a very smart one. It is a win for the consumers. Combine with Zinox IT power, you can expect a very robust and stable platform with improve service delivery to customers. The major concern is whether we might just be witnessing the arrival of a single retail player powerful enough to be a ‘monoploy’. Without a monopoly policy enforcement, there will be reduced customer choice and price competitiveness in the long run.
How do you see the acquisition benefiting Zinox group? What do they stand to gain? And what quick steps can they take to realise these benefits?
The key to growth by acquisition is taking advantage of synergies. Zinox also takes ownership of KOS-Express, Konga’s in-house delivery and Logistics Company as well as KongaPay, its mobile payment solution. So where will synergy come from? This acquisition obviously confers on Zinox huge synergies by effectively combining the powers of Zinox group that includes Yudala and TD Distributions with that of Konga to become a major force in the online retail space.
For Zinox seeking to be Africa largest connected commerce, this strategy to grow its business through acquisition is a smart move offering quicker, cheaper, and far less risky proposition than the tried and true methods of expanded marketing and sales efforts.
In addition, market share equals market influence. By acquiring Konga, Zinox has gained market share immediately and the market influence that comes with it. One key implication is that Zinox now with a formidable market share can more confidently make pricing and other business decisions rather than merely respond to what others are doing. This is also, where the challenge lies ahead for the consumers.
Further, the acquisition offers a myriad of other advantages to Zinox such as;
- Easier financing access
- Instant economies of scale that comes in the form of quantity buying leading to per unit cost advantage and gaining cost efficiencies in meeting general business overhead
- Catching one’s competition off guard, which can distabilise the competition in the short run, especially if competition was unaware and unprepared.
- Instant market penetration in areas where Yudala may currently be weak
- Elimination of competition through its acquisition. Quite simply: after the purchase, Yudala have one less competitor.
- This acquisition means the merging and sharing of distribution channels for Zinox (customer base). With it also comes added value to existing channels.
However to harness the full value of this acquisition, in addition to its technology and financial powers, the group must build a formidable people power and best practice retailing and experience made possible only by well skilled, professional and highly motivated employees. Zinox must immediately invest in the delivery of the right customer experiences that will guarantee customers repeat businesses, loyalty and advocacy. It is also the most potent way to fight customer attrition.
For the retail industry and the economy in general, the acquisition is a very good and welcome development. For us, it is one prediction come true again. Since 2013, when we started our retail development programs, we have been encouraging retailers to prepare themselves for what is coming. For instance, at the maiden edition of The Retail Leaders Conference in 2014, we maintained that collaboration is the new paradigm for retail success in the transforming Nigeria retail landscape. We believe that for the industry to develop beyond where we are now, there must be collaborations – Collaborations that could be in the form mergers and acquisitions between international and locals, and between locals and locals as well as other forms of collaborations between retailers, suppliers and policy makers. Such collaboration is the quickest and sure way to overcome the many challenges facing the industry and harness the emerging huge opportunities brought about by the current transformation. However, whatever the form collaboration may take to safeguard the industry there the urgently need to put together a national retail policy framework that will guarantee a vibrant and competitive retail market.
What final word do you have for retail industry stakeholders?
Therefore, the acquisition of Konga by Zinox is only the beginning of many of such collaborations to come and should be a big wakeup call to retailers prepare themselves to be either the handsome and rich bridegroom or the beautiful and ready bride. It should also be a wakeup call to suppliers to retail and policy makers alike. I see many more acquisitions, and mergers coming on the heels of this acquisition. How will the likes of Jumia and Olx respond? Only time will tell. Nevertheless, the big question for is how prepared are you? The time to find answers is now!