Naspers CEO Bob van Dijk said the multi-national giant is taking on rivals like Google, Amazon and Facebook by focusing on developing local anchors that are hard to replicate.
Speaking at the Naspers annual general meeting in Cape Town on Friday, the Dutch chief executive explained the philosophy underpinning the firm’s e-commerce strategy.
This came after Naspers [JSE:NPN] chairperson Koos Bekker explained that their main competitors are now Google, Facebook and Amazon, “not some media publishing newspapers”.
Bekker said Naspers is dominating online classifieds globally. “We have made excellent progress in classifieds, where we might consider ourselves market leaders in the world – or very close.”
Naspers, whose revenue increased by 19% to $14.6bn in 2017, made 72% of this from its internet and e-commerce activities, it explained in its annual report. Core headline earnings grew 41% to $1.8bn. Its share price was 0.19% higher on Friday at 14:30, trading at R3 022.88, with a market cap of R1.26trn.
The focus on e-commerce comes as Van Dijk centres the business on being a “predominantly” technology firm, moving it away from its traditional base of content and marketing (online, print and TV).
This strategy includes scaling key operations in some of the 120 countries it operates in, increasing its development spend (up 8% to over $1bn in 2017), and making strategic merger and acquisition deals.
“We build local anchors that are hard to replicate,” Van Dijk said. “We are keen to find business models that have a strong local component.”
Referring to its food delivery segment, which includes its stake in Delivery Hero, Van Dijk said the local-centric strategy is crucial. “Food delivery is a many-to-many business,” he said. “It requires a local market force and an understanding of the local market.”
Delivery Hero is the world’s largest and fastest-growing takeaway app that raised €1bn when it went public in Frankfurt in June. Competitors include UberEats, while Amazon is a looming threat.
Van Dijk sees Amazon as a “fierce” competitor that “could be the most relevant company in the world at the time”. However, he believes Naspers has managed to meet them competitively in India, where it has a stake in Flipkart.
“Flipkart is run by 1 500 engineers who sit in India,” he said. “Here we have Indians working on Indian products in India. While it is a tech game in the end, we have local people grounded in the market.”
The e-commerce platform has received about $3bn in investment in the last few months, which will put it on par with Amazon’s “financial power”.
Backed with the sufficient financial power, this local centricity will help Naspers take on its competitors from Silicon Valley, said Van Dijk.
Defending its 34% stake in Tencent, Bekker said Naspers aims to be a major player in the technology space, explaining that it can’t do so if it is a small or medium player.
“The big guys are squeezing the small and middle guys,” he said. “There is much more value in being big and composite. The big three in China completely dominate their market. It is useful to be big and composite in our business.”