E-commerce in the MENA region has been flourishing for the past couple of years. Thanks to advancement and easy access to technology, the region is turning out to be hot e-commerce hub.
A region once known for oil will be known very soon for its Technology Infrastructure.
According to the Global Information Technology Report 2010 -2011, prominent Arab countries have done extremely well. UAE had ranked in at 24th globally, Qatar 25th, Bahrain 30th , Saudi Arabia 33rd and Oman 40th.
This shows that Information Technology in the MENA is here to stay.
Couple of days ago Naspers decided to release the news about its stake in Dubizzle.
MIH internet, the wholly owned subsidiary of the South African media company Naspers, has bought a 25% stake in Dubizzle.com, the popular classifieds and community website in the MENA region.
J. C. Butler, co-founder of Dubizzle commented on the partnership saying, “This happened a year ago, although the press release came out only recently. It was Naspers decision as to which would be the best time to release.”
Apparently Naspers was has not come forward with a reason as to why the delay in making the partnership announcement.
Naspers started expansion with the advent of electronic media, and over the past two decades has substantially evolved from a home grown print business into a multinational media company.
Its principal operations are Internet platforms (focusing on commerce, communities, content, communication and games), pay-television and the provision of related technologies, as well as print media publishing, distribution and printing).
Naspers’s cash and equivalents increased 29 percent to 8.73 billion rand ($1.3 billion) in the 12 months through March, it said in today’s annual earnings statement. Fiscal-year net income rose to 5.26 billion rand from 3.26 billion rand a year earlier.
The group’s most significant operations are located in emerging markets. This includes South Africa and the rest of Sub-Saharan Africa, China, Latin America, Central and Eastern Europe, Russia and India.
Naspers already has a strong presence in China and Russia, besides its originating country South Africa.
In May 2001, the group acquired a 46.5% interest in Tencent Holdings Limited, the operator of an instant messaging platform in China called QQ. The business developed into the leading instant messaging business in China. As at 31 March 2009, MIH has a 35.04% interest in Tencent.
In December 2006 MIH acquired an interest in a Russian Internet business, Port.ru, Inc. (mail.ru). MIH has subsequently increased its interest in mail.ru to 42.88% as at 31 March 2009.
Naspers acquired a 28.7 percent stake in Russian Internet company Digital Sky Technologies Ltd. last year in a deal that included contributing its 39.3 percent in another Russian Internet company, Mail.ru, to DST and investing $388 million in cash.
In Latin America, Naspers acquired 68 percent of classifieds business OLX.com for $144 million in August.
Dubizzle is the U.A.E’s online classifieds and community portal, an open marketplace where people can buy and sell just about anything.
Launched in 2005 in the UAE, it has now extended its reach to 14 countries in the Middle East and North Africa region, and is available in three languages, English, Arabic and French.
Their aim is to become is the largest classified site in the region, and on a global level.
Naspers focuses on attaining sustainable market positions in growing emerging markets which it believes present above-average growth opportunities.
Naspers had talks with 200 companies last year and signed only 20. One of them being Dubizzle. This proves that the company has done its due dillegence very diligently.
Russell Dreisenstock, GM of Business Development at MIH Internet, commented that the investment in Dubizzle.com perfectly illustrates the MIH Internet thesis of investing in strong management teams that have demonstrated effective execution capability based on a sound understanding of their business model as well as local market conditions and requirements.
“Having watched Dubizzle develop over the years into a classifieds platform that competes globally in terms of technology and features, made our investment decision very easy. We see Dubizzle as an exciting example of what this region has to offer and look forward to future projects with as much potential.”
Dubai: the link
MIH internet, the electronic media arm of Naspers, are setting up their office here in Dubai, looking at doing other investments in the region.
This partnership would be their first foray in the MENA region, and entering this region with Dubai seemed like a natural choice, which is undergoing an internet revolution.
According to experts Dubai has always been the market where companies prefer entering first. They want to test the water in Dubai, before they enter other markets an analyst at Goldman Sachs told.
As it is a melting pot of cultures many companies feel more confortable basing in Dubai and then spared their wings.
The successful portal
Dubizzle was one portal that grew exponentially fast.
Launched in 2005 in Dubai, it is the first of its kind gateway for individuals seeking jobs, homes, and goods.
It is a user-friendly, free of cost classifieds where buying and selling became easy.
It first expanded its reach across the U.A.E, but receiving 45 million hits per month, expansion into the whole of the Middle East came naturally.
In late 2010, founders Sim Whatley and J. C. Butler targeted the MENA Region, with a launch in Lebanon, Tunisia, Libya, Morocco, Algeria and Egypt. Consequently, a launch in Syria, Jordan and the rest of the GCC followed.
Today it has reached 14 countries in a period of 6 years.
Naspers gained 0.2 percent to 369.10 rand at the 5 p.m. close of trading in Johannesburg, giving it a market capitalization of 149.9 billion rand as of 27th June.
Success of Dubizzle has not gone unnoticed. Before Naspers offer, the web portal had received numerous offers, some rumored to be more lucrative than Naspers. So why turn all that down and accept Naspers?
For Dubizzle, accepting Naspers was a turning point, as being associated with a company having an established foothold in the global market could prove significantly advantageous.
It shows a steep growth curve for a company co-founded by two people in a small room, to being a part of a big board of individuals.
One of the reasons could be the sheer size of Naspers. The company is in the top three for market capitalization of world internet companies.
“MIH Internet’s extensive knowledge of media and technology industries, as well as their experience in emerging markets, has made them a potentially ideal partner for organizations in the Middle East,” said Sim Whatley, co-founder of Dubizzle.com. “Dubizzle’s own alliance with MIH Internet has been instrumental in turning our creative ideas into thriving business platforms.”
It sure makes sense to team up.
Though Naspers has obtained 25% of the portal, it is rumored that it does not interfere in any of the portals decision making process. Complete and full freedom is provided to the company as before.
Well the benefit that Naspers obtains from this alliance is quite clear. It’s marking its territory.
In the case of Dubizzle it opens up a whole world of opportunity.
Being part of such an impressive family of web portals enables them to use the technology, ideas and technical know-hows from their sister corporates. Imagine being able to use the latest Chinese technology and Russian strategies.
It would definitely make Dubizzle a force to reckon with.
Funds for expansion
Well the obvious factor is money and funding. Which will enable the portal to expand further.
This has already begun!
Less than a year after the launch of the Abu Dhabi site, 19 percent of the traffic generated by the UAE’s two key cities comes from the capital.
It has been phenomenal growth in Abu Dhabi, much quicker than we ever saw in Dubai.
It is in its final stages to complete its Arabic portal.
[Dubizzle will be] everywhere from Casablanca to Muscat, said Dubizzle co-founder JC Butler. In every capital Arab city and, in some countries such as Saudi, in Riyadh and Jeddah, and in Cairo and Alexandria in Egypt. Our goal is to be in 15 new cities by the end of the year.
The only countries we won’t be in are Iraq, Yemen and Sudan but our goal eventually is to be everywhere. Its a natural progression [because] the population is huge and switched on.
Dubizzle’s first targets will be Saudi Arabia and Egypt, the region’s most populous countries.
The aim is to transform Dubizzle into the Arab world’s largest online classifieds service, said co-founder Sim Whatley.
Classifieds is a done deal once you have major market share the kind we have in Dubai. Once that happens, it’s very difficult to topple it because it’s a natural monopoly. It’s that chicken and egg problem people go where the listings are, but the listings go where the people are.
There are a number of existing players, but none with that kind of dominance.
Dubizzle continues to thrive in their new markets growing month on month and seeing significant traction.
Having recently launched their mobile site there is much excitement with where this platform is heading.
Naspers obviously had a strategy. They wanted to enter market quietly, settle down and then let the world know, Stealth Marketing.
Well this is not the first middle east web portal acquisition and definitely this will not be the last.