Ask Andy Higgins anything about eCommerce

[Andy Higgins]

If you could give your younger 25-year old self any advice on getting involved in eCommerce space in South Africa, what would it be?

Great space to build a career but bear in mind it’s a marathon - not a sprint. Be prepared for things to take longer than you would like / expect. Stick to your guns and the rewards will come.

 

[Andy Higgins]

Hi Andy

Nobody has asked you this

But growing up into a successful businessman, who has been the one person who inspired you to go out there and become the person you are today.

We all have our heroes growing up, who has been yours?

I have taken inspiration from multiple sources (not just one). I like the attitude towards life in general of Richard Branson.

I have also read many books on personal finance. The aspiration to become financially independent I think has been a strong driving force to become successful in business. IMO, there is no better way to build wealth than to start a business.

I think personal finance skills are not taught enough in schools and in general not passed down to our children.

 

[Andy Higgins]

Online purchases are still limited to the wealthy, tech savvy 1%. What are your plans to bring ecommerce to the masses?

While there is truth in your statement, from what I can see online purchases are no longer limited to only the very wealthy. I am seeing more and more buyers across the wealth spectrum making online purchases.

I think there is still a structural problem that will take time to correct. This needs to be a collective effort. Partly a payments issue and probably more of a logistics issue. I am hoping to contribute to solving this problem by improving delivery throughout the country.

 

[Andy Higgins]

Hi Andy

Bidorbuy recently radically hiked the commissions it charges sellers on sales, some categories seeing an increase in excess of a 100%. That's not including the additional commission introduced at the same time which is now payable by sellers on all shipping costs.

Reason given in some Bidorbuy correspondence is to cover the increased banking fees because it now obligates all sellers to accept obscure and little used payment options which are expensive to process. Many people are unhappy with that answer as they only ever accept Eft's via Bidorbuy's Bobpay system and the processing fees on Eft's are extremely low. The other reason given was to make the fees easier to understand, they weren't particularly hard to understand before so that reason does not resonate.

Considering Bidorbuy's fee system is now more aligned with international market leader eBay but does not offer any of the perks eBay offers for their fees, like deeply integrated shipping assistance and tracking, buyer/seller protection across the board(Bidorbuy's protection is limited, buyer only and not obligatory). It seems the new value offering is very poor, a fee increase was perhaps due but the magnitude of this increase looks like price gouging with little added value for sellers. Not very much added value for the majority of buyers either yet they will feel the trickle down effect of these new fees as increased prices.

What are your thoughts in this regards, is Bidorbuy ever going to innovate again as they did at the beginning or are they going to rest on their laurels as the first and currently only major platform of its type in South Africa?

As you say, the fees adjustments are now more in line with those of eBay (actually still slightly less as far as I can tell) and less than fees charged by other marketplaces like Takealot and Amazon. I agree with you that where bidorbuy now needs to come to the party is adding value for the fees charged.

Personally I believe you should attribute most of the fee you pay to a marketplace as a marketing fee. Based on this, to pay less than 10% of sales on marketing is not totally unreasonable in my opinion (compare this to the marketing costs for a standalone eCommerce business). Obviously it is not quite comparing apples with apples but you can also use marketplaces as an additional sales channel to grow your overall business without a fixed marketing cost.

I know one area that bidorbuy plans to focus on moving forward is better shipping integration so watch that space.

 

[Andy Higgins]

Hi, do you think the recent trade war between the US and China (somewhat less Europe) will have a domino effect on the local market in terms of those 2 countries protecting their local markets and pushing fees / taxes either favorably or negatively?

Yes. I think any affect will unfortunately be negative. There are no winners in a trade war.

 

[Andy Higgins]

As an e-commerce site owner, my biggest worry is that South Africa's online shopping market is still very small, too small to make real profits while competing with the likes of Takealot, Bidorbuy, etc. With our couriers being very expensive, how would we be able to expand our websites to the overseas markets without charging too much for shipping?

I think you should aim to get your business successful in South Africa first even if it is on a small scale. If you then want to expand internationally pick a single specific market and focus on making that market a success. Use tools like third party warehousing or FBA within that market to ensure you are competitive. Rinse and repeat.

 

[Andy Higgins]

When comparing your ecommerce businesses to Amazon, what is stopping you to go globally as well?

Going global is hard and fraught with many challenges. If you think SA is competitive, wait until you try other markets.

 

[Andy Higgins]

Are the African continent in your scope when doing ecommerce business or mainly South Africa and why?

First South Africa, then Southern Africa, then Sub-Saharan Africa. North Africa really foreign for us Safers in my mind (probably easier to launch in North Africa from Europe or Middle East).

 

[Dandashop]

I think you should aim to get your business successful in South Africa first even if it is on a small scale. If you then want to expand internationally pick a single specific market and focus on making that market a success. Use tools like third party warehousing or FBA within that market to ensure you are competitive. Rinse and repeat.

Thank you for answering Andy! I would love to pick your brain a bit more...

 

[Andy Higgins]

What have you found to be the most effective marketing technique for your ecommerce businesses?

Hands down word of mouth. Provide good customer service and give a good reason for your buyers to talk about you.

 

[Andy Higgins]

How much does it cost to acquire a new customer?

Depends on what you are selling. Generally, I don't think you can get away with less than R100 and if you are spending more than a few hundred Rand you are probably doing something wrong.

 

[Andy Higgins]

Hi Andy

What are the most common e-commerce laws South African e-commerce startups should be aware of to trade locally and internationally?

CPA and POPI for South Africa. For Europe you are going to have to read up about GDPR. If you comply with GDPR you should be good any where in the world.

 

[Andy Higgins]

Hi Andy

I see that you helped start PayU. Why is PayU not one of the purchase options available on bidorbuy?

PayFast! Good question. It should be. I think it is more a case of bidorbuy wanting more direct control over the funds in order to protect buyers in the event of a rogue seller so bidorbuy has built its own internal payment systems for this reason.

 

[Andy Higgins]

If Amazon had to launch in South Africa, would our local eCommerce stores be able to compete given the extensive resources Amazon has at their disposal?

Depends what you are selling. I always encourage people to sell products where in such a case Amazon would want you as a seller on their marketplace i.e. look for more niche high margin products to sell. Rather than highly commoditised products like computers, electronics, DVDs, books etc. rather go for fashion, jewellery, designer, collectable more unique / customisable products. If you are passionate about what you sell that also helps a lot.

 

[Andy Higgins]

Hi Andy

Another question from my side. Is the BidorBuy e-commerce platform custom built or do you guys make use of an open source platform like Magento? I assume however it is custom built. I read through one of your sys admin job specs once and see that you make use of Centos/RedHat linux servers and Xen virtualization.


Apache web server
Nginx for load balancing and http cache

I assume your Server/Network infrastructure is hosted inhouse as your job specs require SAN knowledge etc.

Why not host in a cloud space?

Yes. Custom built. If you are starting out I would not recommend it. Get going quickly with something off the shelf and only move to a custom environment if you really have to (and even then think really long and hard about that decision).

I am a huge proponent of the cloud but a combination or hybrid of the two can also work.

 

[Andy Higgins]

Hi Andy

When you started out with the business planning and funding for BidorBuy and your other ventures. What business planning tools and software did you use?

None really. A two page business plan that was not looked at. Having something concrete (e.g. a working site with some sales) no matter how small is far more important than any planning or paper in my opinion.

Luck of course plays a major role too.

 

[Andy Higgins]

Hi Andy

What is your digital marketing strategy? Do you make use of certain digital marketing providers or are all your marketing teams inhouse?

In house where possible. If not in house then at least make sure you have an understanding of how different marketing channels work e.g. Google Adwords, Facebook etc. Start small, spend time getting your tracking right and then experiment lots.

 

[Andy Higgins]

What percentage does marketing make of the complete new project?

As a rough guide, somewhere between 20% and 40% of sales (or expected sales if you are completely new but ... start small).

 

[Andy Higgins]

Hi Andy

What advise would you give startup's who would like to get into the market against the likes of takealot loot as a major retailer of consumer goods?

Where do we start?
How would we be competitive?

I think your product choice is key. Choose something that can be complementary i.e. where you would be a seller on the Takealot marketplace rather than a direct competitor. Start small and be prepared to build the business slowly. Run tests to see what sells and at what price. Good margin is your friend. If you can enter the market with decent margin you will be much more likely to succeed.

 

[Andy Higgins]

Hi Andy,

Starting with an eCommerce store, would you recommend using a VPS or dedicated server for hosting?

Unless you have very specific requirements, I would recommend starting with a cloud based solution like Shopify (no server required). Even if you are technically minded there is no need to have to worry about hosting, upgrades, backups, spikes in traffic etc. We work closely with Shopify so I am biased but sign up for a free 30 day trial and try it for yourself.