Since its launch last year, Raru has become a go-to name in the South African ecommerce market. Headed up by ex-founders of Take2, they have put their knowledge to use and grown the new store into one of the largest in South Africa.
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On Thursday, Ventureburn sat down with the director of Raru, Waine Smith. We spoke about Raru’s growth and success, his take (excuse the take puns) on the Takealot & Kalahari merger, and where the South African ecommerce industry in heading towards.
Ventureburn: How much has Raru grown since its launch last year and has it met your expectations?
Waine Smith: It’s hard to put a number on the growth, but it has grown better than we expected, yes. I think obviously Kalahari no longer being part of the picture has also contributed towards that.
VB: How has the Takealot and Kalahari merger affected Raru?
WS: Positively. One less competitor.
VB: Does this mean Raru is picking customers who were with Kalahari?
WS: Starting to, yes. And obviously there are people looking for alternatives. Before that, they want an alternative and before they just looked at Kalahari or Takealot, but now they are looking for somebody else.
VB: Raru recently launched its UK and US import sections, which are similar to a previous business [Take2] you were involved with.
WS: Pretty much, yes.
VB: How are you finding the import market compared to other local import companies?
WS: I think our pricing is a bit cheaper because we use different freight models, but otherwise it’s pretty much the same offering and the same kind of products.
VB: You haven’t been involved with that business model for a while. How are you finding its growth, considering other stores have been trying to capitalise on it?
WS: Well, it’s a little bit slow for everybody, I think, because of the exchange rate, which has made pricing a big issue and put a lot of products beyond people’s means. But the take up has been great.
VB: It looks as though Takealot is trying to create a local Amazon.com. Does South Africa need a super ecommerce store at the moment?
WS: There is a market for it, but I think that the risk that they face is having over capitalised. They’re created too big an infrastructure for the market that exists. That’s potentially a problem, but that’s their problem. For the rest of the guys, it’s finding places to play in where they aren’t as effective and their size makes them vulnerable to a number of competitors.
VB: With Raru adding more and more categories are you trying to create a superstore as well?
WS: Most of the categories that we are adding are trying to remain within the same genre. We are focused on entertainment and related products as much as possible. All of the products that you need to be able to enjoy your entertainment on. We are not looking to get into such a diverse range of products at this stage.
VB: Overall, what are you seeing with ecommerce in SA at the moment? There are a few large players, and smaller ones are either closing down or being bought out.
WS: It is a difficult market for a while now. Kalahari and Takealot’s competition with each other has sort of decimated margins in a lot of categories. They’ve made it very difficult if not impossible for a niche player to exist, really and to find breathing space. It’s only our experience, I think, that gave us a bit of a kick start and knowing where to find cheaper products and how to run a business as leanly as possible that enabled us to offer the kinds of margins that you need to.
VB: What is your perception of niche ecommerce stores?
WS: I think if you find traction in your niche, you will always do well if you build up a loyal customer base and you show people that you are willing to provide for their needs in a satisfactory way they will always buy from you. I think Yuppiechef is a great example of a company that doesn’t need to slash margins in order to be competitive. They are focused on a niche and they have gone very deep in the product range and have an enormous range within specific categories. And people are willing to pay the price for the convenience of that. And that’s a similar kind of area where we want to play in as well. Not in terms of product, but in terms of the niche and finding the right kind of products to service customers who want that kind of affordability for their products.
VB: How are you finding loyalty programs in South Africa, such as eBucks?
WS: eBucks are always a bit of a tricky player. They have certain strict requirements regarding length of operation and volume. Loyalty programs at the end of the day, you have to pay for them somehow and some customers see through that. There are very few, apart from the banks themselves, that are successful simply because of that. They are really just a way of building in price discount that is not necessary. Our protocol has always been to offer the best prices across all products every day and not to rely on gimmicks.
VB: Do you see free shipping as a necessity for online stores in South Africa?
WS: Not really. It depends on the product range and the offering that you have. I think most places do offer it above a certain value. And that’s just a way of discounting it and making it more attractive to overcome the hesitancy customers sometimes have. People don’t really want to pay for shipping. They don’t’ see it as a service. They see it as an unwelcome necessity, but it is a service delivering the product to them conveniently. But as I said customer don’t see it that way in South Africa really.
VB: If Amazon has to setup a local store in South Africa, how do you see if affecting the local market?
WS: It would obviously be big competition to Takealot. People would have a lot of confidence in the brand from the get-go, but it comes back to your earlier question whether the market has enough capacity. And I am pretty sure that Amazon must be doing their research and if they wanted to they would have done so by now. If they wanted to be in Africa I guess Nigeria is probably a market they would look at with far greater capacity.
VB: What advice would you give someone wanting to start their own store?
That is a difficult one. I would say always look to try and develop your own systems. Don’t necessarily look to over the counter solutions. And make sure that you understand your market very well. If it’s a market that you have some experience in you’ll have a benefit. But just randomly deciding that you want to sell something online because everyone else seems to be doing it is never going to work. You have to understand the product. You have to understand the customers for the product. And you have to be able to tailor your offering in such a way that people are going to want to choose to use you.
Read more: Image by gruenenrw via Flickr