Cybercellar deal to uncork new market opportunities

This investment will enable the 15-year-old online wine merchant to penetrate the untapped middle market segment and cement the business as an online market leader.

Van Tonder says that despite the capital investment, the injection of e-commerce expertise will drive this growth. "Silvertree Capital has vast experience in scaling growth to high levels in a short period of time. We are confident that this experience and operational insight will enable us to reach our ambitious growth plans over the next few years."

Koser adds 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. The company has the right combination of talented people and operational success, illustrated by the fact that it has had a five-fold revenue increase in the last year and a half."

The deal includes an option to purchase a further 15% shareholding should Cybercellar need more capital to grow. "We are committed to making this a big success story and our vision is to become the online market leader in alcoholic beverages in South Africa," says Koser.

Established in 1998, Cybercellar.com is one of only two original South African internet retailers (the other being kalahari.com) still in business. What started out as a small family-run lifestyle business 15 years ago has now become the market leader in the online wine retail space.

Management buyout proves successful

Van Tonder and his team joined the business 18 months ago and Cybercellar has since experienced massive revenue growth and a 300% increase in customers. Van Tonder attributes this success to the re-engineering of the business together with the organic e-commerce growth experienced over the past year. 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 consumers are now opting for online purchases due to the convenience factor. Convenience is even more pronounced when ordering wine online, as customers can enjoy choosing a wide selection of wines all in one place. Orders are delivered free of charge to major centres and there is no carting around of heavy boxes," says van Tonder.

E-commerce currently contributes less than 1% to the retail sector in SA, but is growing by between 30% and 40%. According to Koser, South Africa will follow the UK experience, where e-commerce now makes up 12% of the retail sector. "It is just a question of time. At scale, e-commerce is a more competitive model than formal retail and Cybercellar is well positioned to become the alcoholic beverage etailer of choice."

Cyber Monday

The company is preparing for a bumper season and expects Cyber Monday - the term given by international marketers to the Monday following Thanksgiving in the US - to be the start of the busiest etailing period for 2013. To mark the occasion, Cyber Monday sees the launch of a Christmas calendar with 24 specials to be released every day until 25 December 2013.

Cyber Monday has become a global phenomenon and 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," says Van Tonder.

The site currently offers over 3800 different South African wines and, in the next three months, aims to double this figure. From early next year, it also plans to expand its already large selection of top-selling international wines, providing more choice and variety for its customers. It recently diversified its offering by giving customers the choice of purchasing craft beers.

For more information, go to www.cybercellar.com.