5 valuable things you should know about SA’s ecommerce scene

eCommerce Confex

Thinking back to some of the golden nuggets shared at this year’s eCommerce Africa Confex in Cape Town, South Africa, one can’t help but note that the announcement of ParcelNinja’s recent multi-million rand investment came at a really great time. This investment reaffirms two crucial things we should keep in mind:

First, South Africa’s ecommerce scene is growing, and — as the case usually is with ecommerce — there’s a lot of money being shifted around. Secondly, and more excitingly, is the fact that there’s a lot of room for unique innovation to take place.

Read more: ParcelNinja just raised a nice fat R20-million from UK investors

Apart from these two trends, we picked up on a couple of other interesting pointers you should know about.

1. Look to African counterparts for inspiration

In Nigeria, for instance, ecommerce companies like Jumia and Konga fit nicely where traditional retail has struggled to scale. Both companies have made the ecommerce business model their own.

In dense cities like Lagos, having a couple of warehouses and a few hundred motorbikes can help distribute products to the country’s 55-million internet users. This would be much easier and cheaper than, say, setting up a bunch of shopping malls.

This video of Jumia’s has been a definite hit in Nigeria and at the conference:

Konga, on the other hand, has found it more important to enable other merchants to sell online than to sell itself. This slight pivot manifested when the company introduced the Konga Marketplace — giving merchants a storefront in the cloud.

Founder and CEO Sim Shagaya said: “If you want things to happen quickly grow a banana tree. But if you want to create something meaningful, plant a baobab. Africa is a baobab because it takes time to grow and it takes a while to build infrastructure.”

Read more: Konga founder: Ecommerce should adopt Cecil John Rhodes’ approach to Africa

South African companies should look to create their own innovations for the country’s own dynamics. This is incredibly important as many attendees posed the question to the panels and speakers, “When is South Africa’s ecommerce going to start using drone delivery?”

2. There’s room for innovation, so innovate

ParcelNinja Warehouse

ParcelNinja’s warehouse also follows Amazon and Yuppiechef’s chaos warehousing technique
Besides ParcelNinja’s logistics and warehouse plug-in solution, we’ve also spoken to the founders of Pargo, for instance, who are introducing a pick-up point system to the country’s online shopping processes.

More than a couple of times during the conference, reference was made to pick-up points — noting that the country’s post offices are incompetent, while courier companies struggle to keep up with online shopping’s growing appetite. A solution like Pargo’s could be just what we’re looking for.

Better yet perhaps is the future application of systems like Pargo’s, where pick-up points could be scattered in townships and rural areas, which today are either seen as risky, far-flung or difficult to navigate.

Read more: Pargo’s pick up points hope to innovate South Africa’s growing ecommerce

Launched only a few months ago, the two Dutch founders of Pargo are implementing a proven model from abroad to SA’s unique environment and have grown their partnered stores to over 20 in the Western Cape, with expansion into the rest of the country coming soon.

Another innovation is the on-demand courier app WumDrop, a company that’s been on everyone’s lips. Since launching to the public in September 2014, co-founder Simon Hartley revealed to us that the company had experienced exponential revenue growth month-on-month, topping a really impressive R61 000 in December.

Read more: From diapers to grilled cheese: WumDrop’s curious on-demand courier service takes on SA

See the graph below:

WumDrop growth stats

The graph shows WumDrop’s steady growth between September and December 2014
“Ecommerce companies see a huge potential with SA’s rising middle class,” Pargo co-founder Lars Veul told Ventureburn. “Now we can setup pick-up points in these areas, which will allow clients to access the market.”

3. Traditional retail is getting involved, slowly but surely

Besides the smaller, nimble tech startups, the traditional big retailer groups are also worth looking out for.

Though moving a bit slower, some of these giants — like Pick n Pay, Woolworths, Pepkor and Massmart — are positioning themselves in the industry as major players. Nikki Cockcroft, who’s heading Woolworth’s Online in South Africa, says that the company’s online retail sees 60% Year-on-Year growth online.

Read moreL South African ecommerce won’t be a big force: here’s why

Last year, Pick n Pay Online furthermore revealed that it’s grown by 27% since 2013. The company has also been positioning itself as a Mobile Money contender, with more than 2 million people using this service between 2010 and 2014.

Cockcroft also stressed their mission of developing an omni-channel retail experience for Woolies customers. This fusion of brick & mortar and online is being seen in Wal-mart’s WalmartLabs — a Silicon Valley-based arm that’s focusing on building tech within the retail space.

4. Mobile is a big deal

“Yes, we know!” I hear you scream — although it still seems like this sentiment hasn’t really sunk in with a lot of people in the space. At the conference there were a couple of nice stats that were revealed to further ingrain mobile’s value within the retail space.

Having said that, building an app for app’s sake isn’t always the answer. To the contrary, if PriceCheck’s data is anything to go by. The company’s CEO, Andre de Wet, points out that while it has seen over 700 000 app downloads, it still sees 944 000 through its mobile website. He found that while people might download the app, that doesn’t mean they are using it. Ninety percent of the price comparison site’s traffic comes from the mobile web. Importantly, the company’s click-through rate increased by 60% once it optimised the site for mobile devices.

Read more: Google predicts massive growth in African ecommerce by 2017

Having said that, South African online shopping sites aren’t fulfilling their potential. As Luke Mckend from Google SA pointed out, 84% of ecommerce traffic in Nigeria is coming from mobile, compared to 55% is South Africa since March 2014.

Gumtree’s Paul Casarin revealed that the country’s most popular local website corners 27% of the market’s Google Search queries. About a third of that comes from mobile devices. Nigeria’s Jumia, on the other hand, sees about half of its traffic come from mobile.

Growing mobile marketplaces in Africa.clipular

5. Today, it’s easier than ever to sell stuff online

Today, it’s easier than ever to get your ecommerce company up-and-running in South Africa. Shopify, ParcelNinja, WumDrop, PayFast, ShopStar and WooCommerce are but a few of the companies that can help you.

If those weren’t enough, we’ve also rounded-up a bunch of tools that can come in hand down the line.

Having said that, this doesn’t mean that running a business is easy. As WantItAll founder Justin Drennan noted, “It’s possible to start a business and make money, though don’t expect to become the next Takealot sometime soon.”

Jacques Coetzee: Staff Reporter


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