Ask Justin Drennan anything about eCommerce and Tech Investments

cfilorux

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#61
Masons

Hey Justin,

How many of these companies have freemasons in charge? Is it a big thing?
 
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Ap0c

ParcelNinja CEO Justin Drennan
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#62
What is the biggest challenge in South Africa when it comes to eCommerce fulfillment?
There have a been a lot of improvements when it comes to e-commerce fulfillment and distribution. Gone are the days when companies were able to deliver in 3-7 days, now most customers are expecting 1-2 day delivery, and anything out of that is perceived to be an inferior service, which reflects badly on the business.

I feel the next challenge around fulfilment is the automation of the process and tying disparate systems together to get a single view of the entire process, from a fulfillment perspective.

All the way from ensuring stock is available to sell, through to reporting on picking/packing and then the final delivery. Keeping customers informed reduces the number of calls to call center and makes the process more pleasurable for the customer.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#63
How did you manage to convince C5 Holdings to provide R20 mil in Capital on this new venture of yours ( even with your well established track record from creating WantItAll) ?
The process was slightly different to the normal way most businesses go about raising funds. We were in a position whereby we had a business which had been well established for a number of years and had a solid management team in place. We found that C5 was looking for tech businesses on the continent and was able to add value to our existing operations.

We were introduced to them through an intermediary, and therefore we didn’t have a formal pitch process, but rather provided information to them on the business, and discussed the opportunity together.

The normal requirements from an investment were looked at:
Product/market fit
Traction
Team
Size of opportunity
 

Ap0c

ParcelNinja CEO Justin Drennan
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#64
How do you cope with having your brother and friend as business partners and be so successful - especially if everyone says never to go into business with friends and family ?
For us it’s been relatively easy as we have complementary skills and have dedicated roles in the business. I feel that if you can compartmentalize each of the roles, and then have an open/collaborative approach to decision making, it will allow for a much smoother process within the business.

I can understand why people say you should not go into business with friends, but for us its been successful.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#65
Hi Justin

Having done a lot of online shopping, when smaller players like Sybaritic and Kalahari just started and the online shops of the day you could count on one hand, today they are a dime a dozen, what differentiates online shops these days, is customer support, shipping and stock lead times, prices and general support, the market hasn't really evolved all that much from 18 years ago, in my personal opinion.Customer support in South Africa has always been poor, lead time from supplier still poor.There is always the issue of capital expenditure of having certain stock on hand.Online shopping from checking out and paying to delivery is constant uphill frustration, fraught with delays, stock shortage or poor support.

As an example sent off an email to an online store about an order made on the 20th which still hasn't shipped after the lead time to procure stock lapsed already, the response was supplier is awaiting new stock, considering the lead time has lapsed already, some online store of yester year would have sent out a automatic email informing of delays and such.This is no longer the case with large online stores like takealot or raru even kalahari email support was atrocious.Takealot has done away entirely with their email support unless they email you directly or contact them via social media accounts.The matter hasn't been resolved, and no closer to receiving my actual order, short of having to phone them, email support is likely going to take at least 3 to 4 working days to sort out, which to be honest is totally unacceptable.I could phone them, but that is a unnecessary additional expenditure on my part for some thing as simple as keeping clients in the loop.

One would expect large online stores would have live support and able to deal with support questions quickly and easily, however the general online shopping experience is some where between a rock and hard place, the only thing that really works well is the payment systems.

If I could focus and improve one thing it would customer support as that sort of binds every department together, if you could focus and improve one thing from the online shopping experience what will it be and why.
Lots of questions/comments in there to cover. Let me try get through them, briefly.

I think the landscape is quite different in that the stores which are running now require investment to work. The ‘dime a dozen’ stores are normally niche/specialist stores, which have their place. They are about specialization and assisting in product selection, while perhaps having breadth of product. A specialist camera store should do better than a generalist, and if they offer decent service, should have some traction. They are normally not a big player, relative to larger online retailers.

Stock on hand has now become critical. Stores which do not stock product offer very little in the form of differentiation when compared to other stores which do the same. A drop-ship model has very low barriers to entry, and if everybody is sourcing from the same suppliers, with he same delivery times, the main point of differentiation is price. If you can reduce lead-times, I think you have some advantage.

Suppliers are an ongoing problem for retailers. Suppliers have traditionally serviced the bricks and mortar retailers, and in my experience have not improved IT systems at the pace required. Real-time stock, prices, imagery etc are all a requirement for e-commerce, and many of them don’t have this data on-hand. This means that if an e-commerce store receives an order, and wishes to buy from a supplier, they need to manually place the order. In the interim, stock and pricing may have changed – which leads the consumer not receiving the order.

Regarding service – I know this is something online retailers need to improve on and is an area we’ve focused on recently. Its something we have not traditionally done this well and are now investing in this area of the business. Regarding bigger retailers – I’ve had great experiences with Takealot, Makro, Superbalist and several online retailers. I think service is getting better, but this might be anecdotal.

So, if I had to focus on one area – I think customer service is imperative, but if I can get the product on-time, within budget to my customer, it reduces the number of customer service queries. Customer service isn’t the answer for everything and is sometimes the band-aid on top of a bigger issue. We’ve focused on service as well as delivery times to help improve customer experience.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#66
What is the most complex part of setting up an e-commerce concern?
I feel that payments, platform, logistics have largely been solved. I don't really see it as complex - its now a matter of having the correct team, selecting the correct niche, having enough marketing budget and being able to execute.

In poker they talk about sitting down at the correct table. In e-commerce you need to make sure you have the correct niche, with enough margin.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#67
South Africa being South Africa as online shopping becomes more popular is there an increasing concern about security for packages and delivery vehicles?

From what we've experienced, there is little to no loss of products from couriers. Over the years the couriers have become more secure, have invested in better systems and have geared themselves for e-commerce.

As such, we’ve not seen a need to increase security for vehicles, but that might also be a function of the products we ship. If we did high-value goods, it might be a concern, however there are specialist services which handle that.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#68
Whose holding ecommerce back more in SA, the banks or the mobile networks?
I don’t really think either. Over the last few years, we’ve seen a dramatic shift to more people purchasing at night, and on mobile devices.
In 2016, mobile was 25% of our traffic, it’s now 50% - sure we could always do with lower bandwidth costs, however if you can’t afford to pay for 1GB of data, chances are the delivery charge for e-commerce will be prohibitive.

All the surveys I’ve seen, relating to e-commerce indicate that trust is the biggest factor. Both the security of credit card information, and the trust relating to the store. I think the bigger players are addressing both these issues, by making people aware that e-commerce is safe.

In South Africa we pay a ‘trust tax’ daily, in all sorts of exchanges and transactions. You just don’t see it, but South Africans have learnt not to be trusting. Add the anonymity of the internet, credit cards, and horror stories, and you have a perfect storm as to why e-commerce is not as prolific as you would expect.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#69
Amazon is absolutely dominant in the United States. South Africa by contrast has some decent online stores, but nothing close to what is seen in the US. With this in mind, what could we do in South Africa in order to raise online internet shopping in South Africa to the same standard and levels of uptake as that in America?
I really believe that e-commerce in South Africa has improved dramatically over the last three years. We’ve been hearing about how large e-commerce is, and how every year is ‘the year’ for e-commerce, however only the last few years have shown dramatic improvements and growth in the space.

The e-commerce players are working hard on several fronts to improve various aspects of e-commerce, but you must remember that it’s still relatively new in South Africa, and without the scale and time, you can’t expect us to be where the US is.
At the same time, we don’t have the same population density, spending power or trust the guys in the US have, so we can’t expect to be on their level as quickly.

I think that with scale, comes efficiency and better service to customers. We need scale to offer better service.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#70
I got involved in a heated debate this past weekend and a interesting topic popped up regarding wantitall.co.za most savvy users don't make use of wantitall.co.za due to the pricing used on the website being quite a bit more, then importing the item your self with various fees it is still a lot cheaper then what wantitall can offer it at.You can't help but wonder who is the sucker that buys from wantitall.Even with all the various fees attached to items imported, there is still room for adding profit, short of asking double the price or more, to me it ends up looking more like greed then filling a gap in the market to import goods.It's not like there is lots of red tape when buying internationally, and works the same as any other online shop.

As the argument went on we agreed that the current pricing model really can't be sustainable in the long run, I have seen some people offering importing services, who then makes use of services them self to import goods that generally don't ship to South Africa and generally still works out cheaper then what wantitall charges.I do apologize for being a little straight to the point and a little brazen on the subject matter. So the question is does wantitall rely on consumer ignorance for it's business model to be sustainable in the long run or is there a specific reason why the current pricing model is used, how will wantitall react and adjust to a consumer rebellion.
Nice to hear you guys are having heated debates…. And you don’t have to worry about being blunt. Lets just give you a bit of the story….

The business was started around the same time Amazon stopped shipping products to SA. Our intent of bringing products from the USA to SA, and manage the entire import process, giving people an 'all in' price, without any hidden duties, VAT or exchange rate fluctuations. Anything which is available in South Africa, we don't want to import.

Back in 2007, with the R/$ at around R6.5/$ we were able to offer South Africans prices which were better than local, but more importantly offer them products which were not available locally. We used to get iPhone, Kindles, and all sorts of electronics before they were available in SA. Yes, times have changed, and SA now has access to a lot more products, but our intention was always to bring products you can’t find in SA.

Why are things overly expensive from time to time….Well, we get products from a few suppliers in the USA, and because of the size of the catalog, and the nature of marketplaces, we don't curate products - as the amount of labor required is prohibitive.
So, while we won’t import certain products, some products listed are expensive, or just look ridiculously priced. This is primarily an issue regarding product dimensions. If the supplier loads a product at 1200kg instead of 1200g, then obviously the cost to air freight the product will change dramatically. That’s why you find some of these examples.

Our intention is not to be more expensive than local stores, and if products are available locally, rather source locally. We just want to bring in those 'hard-to-find' or problematic products.

Our service is really that of convenience. We’ve heard time after time that it’s cheaper to import products from abroad, and while in some cases it is, we manage the entire process and guarantee delivery of the goods. If you can get it cheaper, you are welcome to do so, but we’ve had lots of stories of items being stuck at customs, or import codes being required. We sort all of that out.
Making use of re-shippers is also something people do, however if you don’t import regularly, and only want an item periodically, sometimes it doesn’t make sense to pay the monthly fees.

Remembering, we also declare all items at full value, pay appropriate taxes/duties/VAT etc, so if you want to bring items in, through other methods, that’s something we’ll never do.

We’ve been around 10 years, so we must be doing something right

Hope this gives you a comprehensive view – if there is anything I’ve left out…more than happy to help answer.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#71
Hi,

Despite Wantitall offering an outstanding variety of products, why is there more frequently than not, a price disparity between shipping the same item from Amazon.com yourself (including relevant import duties and shipping costs) and buying from the Wantitall website so large? Sometimes the item is several hundred percent pricier, and I would love to learn the reasons for this.
Normally this is some issues relating to the product weight.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#73
Hi,

There’s a gap in a certain industry that I want to take. How do you begin/how do you start setting up a website/online service to fill this gap, as this will take a notable investment?
I'd have a look at what Andy Higgins and the guys at https://www.uafrica.com/ are doing. I think they provide an amazing platform to help get you to market ASAP, with exceptionally low cost.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#74
The growth on internet user is growing in the country, but when you started it was still way less to the population of the country. With that hurdle in mind, how did you gather inspiration to move from a 9-5 to start your own company?
I don’t think there was ‘inspiration’ – it was just something which happened to us. We essentially just set out to solve a problem whereby we wanted to get a product from the USA, and then it all just snowballed.

I think when people talk about product/market fit, they talk about the term loosely. Its basically, when you put your product out there, people ask for it, and want it. We were just lucky enough to have that. People wanted product from the USA.

That together with some long hours, let the business grow, and we were just excited about it. That excitement led us to carry on building it….and leave previous employment
 

Ap0c

ParcelNinja CEO Justin Drennan
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#75
Good Day, Justin

If i look at ecommerce i would say the market is really flooded with a lot of everything id say, i have been looking for something that no one else is doing yet, the one between the millions of everything that everyone is already doing or trying to do but i seem to be struggling to find that one.

What would you say would be one of the next big things or possible big things in ecommerce in south africa, which can make money but also improve the daily lives of south africans and create jobs for our fellow south africans?

Thank You
Shew, thats also something I'd like to do. People need to do good, as well as make money. Triple bottom line, and looking after people and the environment is something we are well aware of.

Things which are potentially big in SA, and e-commerce - try solve a problem for the bottom 1/4 of the pyramid. E-commerce caters to the top few percent of people in SA. Find something for the remaining market and innovate there.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#77
How will you be using AI to improve the customer experience in your business?
I think ML/AI are terms being thrown around quite a lot, without really understanding the implications, or if its the best solution for the problem:

https://en.wiktionary.org/wiki/if_all_you_have_is_a_hammer,_everything_looks_like_a_nail

Right now we aren't investing in AI/ML, however it is something we are going to look at, from a warehouse optimization perspective. Similar products, FMCG product placement in the warehouse, and a few other places could work well.

Our customer support queries are a bit complex at the moment to use ML, and we feel we don't have enough data to build a proper ML/AL system with enough data to train it to be of proper use to our customers.

We do however use RFM segmentation on our customer base. We started doing that in 2007 ;)
https://www.slideshare.net/WhiteRavenPL/rfm-segmentation

You really need a big data set in order to make this work well.....
 

Ap0c

ParcelNinja CEO Justin Drennan
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#78
Hi Justin

What is the future of DSTV and will Netflix and Amazon Prime make it a Kodak moment?

Regards
Certainly looks that way for now. I no longer use DSTV, and my kids have never really seen an advert. Netflix + Showmax + Youtube for kids = on demand quality programming.

Sport seems to be a fairly large moat, however with FB and Amazon looking into that, things might change quickly.

Can DSTV innovate quicker than Netflix can scale? That's the question.
 

Ap0c

ParcelNinja CEO Justin Drennan
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#79
Hi Justin
Customer and Product profitability analysis/pricing models are obviously key for e-commerce sites (as they are for any other retailer). What sort of emphasis do you place on this, and is there any particular software that you use for this particular purpose?
We've been working on this for a number of years. We've always taken a data-driven approach to our customers and marketing. Every cent we spend is accounted for and ROI analysed.

For customers we use a standard RFM model to maximise customer ROI and make sure customers are engaged.

On the products, we've done A/B tests many many times in the business, and we continue to do this. If we drop prices X, what impact does it have on sales. Is the net effect greater than before the drop? - we have a look at this all the time.

We really do have a lot of data, and have been using it since day 1
 

Ap0c

ParcelNinja CEO Justin Drennan
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#80
Seeing as you are so active, involved and you have such a big influence on the local eCommerce marker, what are your thoughts on Cryptos? And do you think they have their place to actually be used in the local eCommerce market to purchase goods?
The guys at payfast, and Bidorbuy have been supporting crypto for a while. While I think blockchain is an interesting technology, I'm not sure which crypto/coin/protocal will be the winner.

It seems to be the same as the dot-com boom. If you had picked amazon back then, you'd be rich. However there are a lot of failed businesses on the path to creating facebook/google/amazon

Right now, it doesnt seem to have large adoption regarding e-commerce payments....even from the guys guys who are bleeding edge.
 
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