Ask Andy Higgins anything about eCommerce

[Andy Higgins]

Innovation is key in eCommerce, how do you maintain this or introduce new ideas to keep existing ventures going?

I would actually consider myself a bit of a laggard. Probably a bit of a contrarian view but I think it is more important to have perseverance than to be radically innovative and always on the cutting edge. Make sure you do the basics well rather then always trying to do the next best thing.

One advantage we have as South Africans is we can see what is working elsewhere in the world, adapt it and implement it in the local market if we see fit.

 

[Andy Higgins]

Do you ever think Amazon would launch in SA? What do you think would happen to the existing players in the space if this were to happen?

“Ever” is a long time. I don’t see it happening any time soon. I just think they have bigger fish to fry elsewhere.
If they did ever enter the local market, they probably would not do so without buying a local player. As much as these businesses are online, they still require a significant local presence in order to operate. This would be a problem for direct competitors but I don’t think it would be the end for niche local operators – in fact it might even be positive for them. Bear in mind that more than half of Amazon’s sales are by 3rd party sellers through their marketplace.

 

[Andy Higgins]

Given the current state of our logistics systems in South Africa and the fact that government are running out of money which, in my opinion, is going to lead to infrastructure issues further down the line, do you believe that shipping costs would decrease or increase and if so, would the larger companies like Makro Takelaot etc begin to start charging for delivery?

I would hope with increased scale, the costs should come down (relatively speaking). I think some merchants will charge for delivery and others will find ways to include delivery in their product cost / overall service offering. Delivery is a fixed cost and as a buyer you end up paying for it one way or another.

I think loyalty programmes like Amazon Prime linked to “free” or discounted delivery will become more popular. The larger companies will find ways to make you buy more from them by making you think you are not paying for delivery.

 

[Andy Higgins]

if you had to restart your Ecommerce journey with bidorbuy, what would you do differently this time?

I would charge for our service from day one. We did not charge for our services for the first two years.

 

[Icemanbrfc]

Hi Andy

You have a lovely Profile Picture on MyBroadband, who chose that?

 

[Andy Higgins]

How long should a new ecomerce site expect to trade before a profit is shown?

It is possible to do so from day one. Start small and grow slowly. It is a marathon - not a sprint.

 

[Andy Higgins]

Dear Andy,
When doing a SWOT analysis for this kind of business, what are the most important points to consider?
(Strengths, Weaknesses, Opportunities and Threats)
Thank You

That sounds like an MBA question. I would not get too hung up on creating the perfect business plan. It is easy and cheap enough to experiment and let the market dictate what works and does not.

Set up a very basic store or start selling on a marketplace without a store. See what sells and what doesn’t (either having very few items in stock to start with or even without having any inventory i.e. just a commitment from a supplier should you make a sale).

If you have decent margin on a product you can fix most other things.

 

[Andy Higgins]

To me, it seems like most eCommerce businesses are sabotaging their own efforts. The average conversion rate is 1.84%. For every $92 spent attracting customers, only $1 is spent converting them. 98% of visitors will never make a purchase! Are the websites mostly rubbish and/or untrustworthy? Is it online marketing that is poorly targeted and/or low quality? Do most businesses not impart their value proposition?

No doubt you think about this a lot Andy, and I'd love to hear your thoughts.

A 2% conversion rate is pretty typical. Trust is obviously important but it is possible to create a sense of trust on a website even if you are not well known (trust seals, live support, prominent contact details, reviews etc.) so probably more your second point (poor marketing).

I think one area where marketers can do better is to have more targeted landing pages. At least for online advertising, if you are sending all your traffic to your home page, like many seem to do, you are not optimizing your return on marketing spend. Ideally you should have a targeted landing page for every advert that you run and each advert should be tailored to a specific targeted potential buyer.

 

[Andy Higgins]

Do you feel a sense of monopolization in the south african ecommerce industry with all the big players getting together and making collective decisions?

No. If there is consolidation I think it creates opportunity for others to fill the void that the consolidation creates.

 

[Andy Higgins]

Hi Andy. What are your projections on growth of eCommerce in South Africa in terms of year on year and as a % of retail in SA?

I have given up trying to predict the growth. In the earlier years I was hoping we would see some kind of exponential growth i.e. a tipping point, critical mass, knee of the curve or whatever you want to call it. This happened in a number of other International markets but not in South Africa as far as I can tell.

I am however confident that online will continue to grow significantly faster than offline retail. As a broad range say online will grow at 20 to 40% per year with offline growing low single digits.

 

[Andy Higgins]

How would you explain e-commerce to my grandmother versus a potential investor.

Grandmother - Like mail order except you don't have to speak to a person on your phone (you just click on what you want).
Investor - The Amazon, eBay, Zappos etc. of a country.

 

[Andy Higgins]

eCommerce has always been a place where one views, reviews and buys, what do you envisage being the next evolution of ecommerce and how will it fit into the iOT ecosystem ?

As mentioned in a previous question, I am not necessarily the innovator. I look to what is happening elsewhere in this regard. This is already happening but things like the Amazon Dash buttons (e.g. where you can reorder washing powered by pushing a button on your washing machine). Or things like Amazon Alexa / Google Home where a digital assistant will place orders on your behalf.

 

[Andy Higgins]

Takealot is getting a lot of funding from its investors, but is failing to make any headway on becoming a profitable entity that doesn't have to rely on solely on investors to keep it afloat.It managed to burn through 1 billion rand investment in less then 2 odd years.It also surprises me that they haven't considered importing and dealing directly with manufactures on a large scale and cutting out the middleman entirely.

Why hasn't takealot seized the opportunity to make investments in other e-commerce sectors, like cloud storage, secondhand market, streaming services ect, I find it amazing that it's sticking to it's guns and just focusing on one area of market which it already has vast majority of market share and still failing to make any worthwhile profit.

Personally I don’t think it is a bad strategy to “stick to your guns” and get the basics right i.e. to become profitable before leveraging other opportunities. I think it is still early with lots of growth in the market to come. I am sure you will see them taking advantage of other opportunities in the future.

 

[Andy Higgins]

What are your thoughts on the recent investigation and news about takealot and onedayonly inflating retail prices to show increased savings, are they handling the matter correctly, it seems they have some good spin doctors working in their PR department.

All companies should market truthfully and ethically. And when they don’t they should be held accountable.

 

[Andy Higgins]

South Africa is most certainly catching up with the technological aspect of commerce, and eCommerce is becoming more and more trusted. The question I pose to you Andy is this: Do we as South Africans tend to focus on a too small audience when it comes to eCommerce? What I mean with this is, that most eCommerce websites I come across focus on local areas and restrict growth and expansion to international markets, is this not limiting...

I think we have to accept that we have a relatively small market but that is not to say that you cannot make a success while keeping this in mind. I know this is not a popular view (especially when trying to raise funding) but I think South Africans should focus more on local opportunities and solving local problems. We have a home advantage and less competition. Going international is tough and comes with many challenges. Get the business right in South Africa before considering expanding beyond the borders.

 

[Andy Higgins]

Hi Andy,

What are your biggest hurdles in terms of growth in the South African online commerce space, and do you foresee the growth to continue at the current pace or wane off after a number of years?

I think some of the historic barriers like connectivity and payments are now largely non-issues. Logistics is still a barrier (but improving). I do think there is an inherent “shopping mall” culture in South Africa that is slow to change but I also believe that there is still a lot of room for growth. I think growth will at least continue at the current pace for some time to come (or hopefully even accelerate).

 

[Andy Higgins]

Hi Andy

How can we use the online space to help eradicate or reduce unemployment. Jobs are so hard to come by, so can we look to online solutions to get more people to easily find work

Thank You

I know not every one is entrepreneurial but if you are that way inclined try and find something that you can buy for R100 and sell for R200 online. It has never been easier (and cheaper) to start an online business. Start small and build from there.

There are also so many great online resources to up your skills and make you more attractive to prospective employers. You can literally teach yourself just about anything using YouTube or sites like Udemy.

I believe our issue as a country is more around skills shortage than job or opportunity shortage.

 

[Andy Higgins]

Hi Andy I've created a fully functional woocommerce website integrated with payfast. Will you be my eCommerce Business Mentor?

Fantastic. I can’t commit to being a full on mentor but I will happily have a once off session and share some of my thoughts with you.

 

[Andy Higgins]

Hi Andy,

With regards to the mitigation of Know your client and anti-money laundering obligations enforced by The Financial Intelligence Center and further acts,, why do South African eCommerce sights feel the need to be above the law and do away with the enforced compliance in order to win over "market share" of potential buyers(where no user verfication and KYC/AML Obligations are enforced on the end user)? in light of understanding this, why does the government not fine and shut down these operational eCommerce Sites and MarketPlaces?

As far as I am aware there are no requirements for an eCommerce site with regards to KYC. However there are of course other laws such as the Consumer Protection Act and POPI that need to be complied with.

I believe those sites that do not respect these laws will ultimately not survive so it is not a good business strategy to break these laws. If not the law itself, the market will ultimately punish them.

 

[Andy Higgins]

Hi Andy,

What is the single most prominent thing that you see new online shop owners do/get wrong in South Africa?

They try to do everything perfectly from day one. Rather launch an imperfect site quickly and cheaply, start making sales and then make many small improvements by iterating quickly. Don’t be afraid to experiment e.g. with small amounts on paid advertising (using Google, Facebook etc.).