South Africa-based venture capital investor Silvertree Capital, has acquired a 24 percent stake in a leading local online wine retailer, Cybercellar.com, for an undisclosed amount.
The investment is expected to enable the 15-year-old online wine merchant reportedly offering over 3,800 different local wines, “penetrate the hugely untapped middle market segment and cement the business as an online market leader.
Manuel Koser, co-founder of Silvertree Capital and co-founder of runaway success online retailer zando.co.za, says the decision to invest in Cybercellar was based on its human capital: “E-commerce is a very complicated field and success needs a strong team of experienced people that are committed to deliver excellent performance for customers. Cybercellar has the right combination of talented people and operational success, illustrated by the fact that the business has grown with a five-fold revenue increase in the last year and a half.”
The deal with Silvertree Capital includes an option to purchase a further 15 percent shareholding should Cybercellar need more capital to grow.
Established in 1998, Cybercellar.com is one of only two original South African internet retailers still in business, the other being kalahari.com.
Van Tonder and his team joined the business 18 months ago and Cybercellar has since experienced massive revenue growth and a 300 percent increase in customers. In March this year Van Tonder and business partner David Muller took over the business following a management buy-out.
“This is just the start of the projected growth. Although the domestic e-commerce market is still predominantly high-end focussed, with the increase in access to infrastructure, broadband and mobile data networks are growing. More and more consumers are now opting for online purchases due to the convenience factor,” he says.
E-commerce currently contributes less than 1 percent to the retail sector in SA, but is growing by between 30 percent and 40 percent. According to Koser, there is no question that South Africa will follow the UK experience, where e-commerce now makes up 12 percent of the retail sector. “It is just a question of time. At scale, e-commerce is a more competitive model than formal retail.”
Commenting on the American shopping frenzy day whose influence is spreading in Africa, Von Tonder says, “Cyber Monday is the biggest online shopping day of the year. This is also true locally and the first Monday in December has seen a marked spike in online shopping activity as South Africans get ready for the holiday season. The first two weeks of December usually see a significant increase in online shopping, which tapers down after the public holiday on 16 December, as many South Africans start going on leave.”
