Zinox denies paying $10m for Konga, clarifies merger plans

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Three months and 14 days ago, three keywords were trending on social media across Nigeria, they were: Zinox, Konga and Yudala.

Nigerian online shoppers and several other Nigerians online were curious to know how the news of the decision of the management of ecommerce powerhouse, Konga.com, to accept the offer made by Zinox Technologies to acquire all the Konga entities including the ecommerce platform, payment service and logistics operations, would affect customer care and service offerings especially when indications emerged that Zinox bought Konga to merge it with Yudala.

One of the talking points regarding the deal was the brandished figure of US$10 million as the sum paid by Zinox for Konga, KongaPay and KOS logistics company. Several local and foreign news platforms credited unnamed sources with the figure. But in an exclusive chat with TechCity, Gideon Ayogu, head of Public Relations at Zinox Technologies said the estimate was wrong.

“The rumored figure is way off mark. Konga is worth more than that and we paid way more than $10 million for the company,” Ayogu told TechCity. 

When pressed further to disclose the official figures, he said the company is not yet at liberty to share the figures since the former owners of Konga included Naspers and several others who would want their boards and shareholders to approve the publication of the deal’s details before going public with the declaration of the figures.

“We will share the figures with you in due course, specifically when we are allowed to do that,” he said.

The merger so far

Initially, Zinox denied it would be merging Konga with Yudula but in mid-April, it addressed a press conference where it was revealed that Yudala and Konga would become one from May 1 with the bulk of merger focusing on integration using the Konga brand name and technology, and Yudala’s offline network of pickup outlets.

True to its promise, from May 1, Yudala’s website began to redirect to Konga. Furthermore, the later’s online brand has been redesigned to reflect Yudala’s purple (?) color.

On social media, Yudala stopped sharing posts on its Twitter page on May 1 and it has been using Konga’s Twitter handle ever since. But the merger is at snail speed offline which is an indication of the existence of numerous issues which developers alone can now solve at the click of some buttons.

Investigations by TechCity revealed that several Yudala outlets across the country including some in Lagos are yet to become branded as Konga.

In Ibadan, Yudala has an outlet at the Palm’s Shopping Mall at Ring Road in the heart of the city.

When TechCity visited over a period of three weeks, the interior and exterior parts of the store still in Yudala colors. Staff on duty told TechCity that while they were aware of the merger, the decision on how to rebrand the outlet will be made by the management.

The situation is the same at the Yudala retail store along Medical Road near Computer Village in Ikeja, Lagos. The store still wears Yudala colors, even its online address and that of several other Yudala retail stores are yet to be changed to Konga.

This observation has led several arguments around the real deal that was signed by Konga and Yudala. It would be recalled that an intricate part of the deal was that Yudala’s CEO would head the offline business while Konga CEO would head online operations.

Some industry watchers argued that Yudala stores continue to bear the brand name probably because the contract allows the brands to maintain their individual identities with one becoming a subsidiary of another.

But a visit to the Yudala store at Marina revealed that this assertion is not true as it has been rebranded to reflect the new identity.

No cause for alarm

When TechCity reached out to the owners of Konga for clarification regarding the acquisition and branding, the company said the confusion in the brand identity was as a result of logistics issues encountered.

“We are not the ones doing the rebranding of the stores by ourselves, we have outsourced it. It is the people handling the project that have not been able to complete it,” said Ayogu.

He confirmed that some of Yudala’s retail stores are yet to be rebranded but he told TechCity that the rebranding would be completed by the end of May.

He also told TechCity that instead of laying off members of staff as earlier predicted by several individuals and as expected when there is a merger of two companies operating in similar sectors, he said the company is planning to recruit more workers and to open new stores.

“Let me clearly state that we are not sacking anybody. On the contrary, we are actually employing more people and this is because the merger has made new job positions to be available and we need more people to join the company as we aim to fulfill our dream of having a store in every local government in Nigeria,” Ayogu told TechCity.

He told TechCity that the company is targeting to have a total of 100 stores across Nigeria before the end of 2018 – a feat which he said cannot be attempted by other ecommerce platforms.

Plans to achieve profitability

Another promise made by Zinox Technologies and Yudala was that the merger would enable Konga to become profitable as soon as possible. In spite of the announced plans to open new stores, the company remains confident that it is on the quickest path to profitability and it aims to achieve this by closing the identified loopholes in Nigeria’s commerce sector.

“There are a lot of loopholes in the Nigerian shopping culture and we are planning to address them,” he told TechCity. “What we are doing is not rocket science but leveraging on the strength of both platforms. ramp up operations, improve on customer satisfaction.”

He added that Konga can quickly become profitable if it is able to increase retail footprint to provide convenience by making it possible for customers to shop online and pick up the orders at a store that is near to them. We want to be close to the customer as soon as possible even at tight deadline since many Nigerian shoppers don’t shop until the deadline is fast approaching.”

He also revealed that the company wants to improve on customer satisfaction by ensuring that customers receive what they ordered online.

“This is why unlike in Asia and other parts of the world, many Nigerian online shoppers will want to see what they ordered before paying. This is a well documented major challenge that is problematic to overcome without physical stores,” Ayogu told TechCity.

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