Wootware’s Rory Magee on growing ecommerce success in oversaturated market

Starting an ecommerce store in South Africa is a difficult undertaking; making it a success is a far more daunting challenge. Wootware is an online PC store that, despite a difficult and saturated market, has continued to thrive. Since its launch in 2009, the store has continued to grow during a recession and unstable market, which is no short feat.

We sat down with Rory Magee (pictured above), the founder of Wootware, to find out a bit about the store’s success and his take on the South African ecommerce market.

Ventureburn: Tell us about Wootware?

Rory Magee: We are an enthusiast-focused computer consumer electronics retailer. We are absolutely devoted to customer service and if you are looking for a high-end gaming PC or laptop we are the first stop to come to.

VB: How much has the store grown since it initially launched?

RM: Since launch we have gone from nothing to basically everything we have now. So, since two years ago we’ve grown sales 300%.

VB: A few years ago Wootware started importing a few brands. Have you seen a positive response to this?

RM: It’s been incredible. Our customers are able to get better pricing and local support. If there is any technical question that they have, we are able to give them advice very quickly. In the unlikely event that a customer does need to RMA (Return Merchandise Authorisation) something with us, and it’s one of our brands, we’re generally able to make those decisions a lot quicker, and we’re able to get them replacements a lot faster.

VB: Have you had any backlash from local suppliers regarding these imports?

RM: We have heard definitely from certain suppliers, but for the most part I think it has been fine. We’ve generally focused on bringing brands that haven’t been available in South Africa.

VB: Why do you only focus on EFT and not offer credit card as a payment option? Do you find this alienates some customers, especially those looking to purchase high-value items?

RM: We found that it is definitely a trade-off for certain customers, but it’s one that we’ve been willing to make. Typically your credit card processing fees at the very lowest are going to be three percent. If we look at how that is going to add up, especially in an industry that’s going to be relatively low-margin, it can end up taking up to a third of your profits just from accepting credit cards.

We basically found that most customers that we deal with are more than happy to do an EFT or cash deposit and because of this we’re able to give better prices while retaining our service levels.

VB: Have you encountered any fraudulent activity with this method?

RM: No. We do get the odd person that has tried to deposit a cheque, but that gets picked up immediately. The great thing about EFT and cash deposits is you know that the money is there. You know that it has cleared. And it is non-reversible.

VB: Why use an off-the-shelf ecommerce solution as opposed to building a custom platform?

RM: With the resources that we have it wouldn’t be possible to build an entire custom system. It would also be, to some extent, reinventing the wheel. We found that the system we are using has been the best choice, even still going back.

We are running Magento and it is heavily customised now for certain features that we need, but definitely overall it’s been a good platform choice. One that we are happy with.

VB: How do you protect yourselves from cybercrime and the loss of your customer’s information?

RM: Thankfully we do not take the payment information online. That is all handled by the customer. So there’s no risk of credit card fraud. All of our customers’ password information is encrypted in our own database and never gets sent to them in clear text form.

Our hosting provider in the US is PCI DSS compliant and has all the latest security features available on our web server. As well as the fact that we’re running the very latest version of Magento with all relevant security patches enabled.

VB: How do you market Wootware?

RM: We’ve got great customers that give us a lot of word-of-mouth advertising, which is definitely fantastic.

We also do advertising through Google AdWords as well as listings on PriceCheck and other price aggregation websites. From time to time, we might also have specific promotions, newsletters, etc. But all of it is online-focused.

VB: Have the local price sites helped you that much?

RM: Yes, they definitely have.

VB: What sets you apart from your competition?

RM: We have a very laser-like focus on customer service and making sure that we want to be able to bring customer products that they might not be able to get at other places. We want to make sure we can supply them the best mix of pricing and performance on everything they buy from us, as well as after-sale service. We do especially well with that. I mean, I think you’ll see looking through our website, if someone is looking to build a high-end computer from scratch, we’ve got prices that no one else is able to match at the moment.

VB: What are your thoughts on free shipping?

RM: I believe that the more efficient business model is to deaverage those costs and charge exactly what the shipping should cost for each order based on the weight and area it’s being shipped to. For instance, shops that do offer free shipping, let’s say for instance you get free shipping for orders over R1 000. If you buy ten items that are R1 000 each you’re essentially paying for the shipping cost that’s been built into those items’ price 10 times.

VB: What are your thoughts on the Kalahari and Takealot merger?

RM: I think it’s not ideal in the sense that there’s reduced competition. It does become a little bit more dangerous to have a player getting too large. There should be healthy competition in South Africa.

VB: Thoughts on the general SA ecommerce market?

RM: I think both the niche stores and the big stores should be poised to do well as long as they get the basics right. I don’t think it can be understated how important customer satisfaction is. I mean our store in particular, I know Yuppiechef as well, if you look at HelloPeter reviews you’ll see it’s overwhelmingly positive.

People do want to deal with a store that they feel has their best interests at heart and basically has a mission of improving the market in South Africa. I mean we want to make it easier and cheaper and faster for people to build their high-end gaming PCs. And that is why we want people to shop with us. In terms of the market in general I think it’s definitely a very healthy market. There is definitely good growth.

VB: What are your thoughts on oversaturation of the SA ecommerce market?

RM:  Funnily enough, there have been a lot of instances where people have shopped with us and they’ve said to us it’s the first time they’re shopping online. I mean, that is still happening today. So there’s more and more people getting online.

In terms of oversaturation of particular markets, I think if you look at the IT market in general there have been a lot of online IT stores that have popped up and subsequently shut down. When we started, Sybaritic and Prophecy were the big names at the time. Both of them have subsequently shut down. There were also a number of other stores that launched and subsequently folded. So it definitely does take a lot of patience, dedication, and hard work to survive.

But you can focus on beating the saturation by differentiating your product and your service and making sure that customers have a reason to shop with you. You cannot just be the same as everyone else.

VB: Do you have any advice for someone wanting to start an ecommerce store?

RM: Be prepared for a lot of time that will need to be spent on reading up on the market. Learning pretty much all facets of what you are going to be dealing with. I definitely think that you need to be a jack of all trades. Reading veraciously is going to be a very big part of that. And you’ll also need to have a hefty dose of discipline and work ethic.