SA online shopping problems?

[MagicDude4Eva]

One thing many online shops underestimate is the power of Woolworths, Pick n Pay, Makro, CNA - their retail footprint is so big that you will be able to reach one of those stores in less than 30 minutes. As such it will just make perfect sense to come up with a properly working "Click & Collect" model.

None of the overseas players have been able to make the C&C model work properly as in most cases it takes longer for pick-up than actually just picking and paying for the products in store (granted, some issues are stupid logistics - such as not having signage for customers to know where to go for the collection). A completely overlooked model in SA is the footprint of petrol-stations (only leveraged by a few fast-food outlets) where you have 24x7 staff - so it just makes sense to implement a fulfilment plan to deliver to your local petrol station for example (all of this comes with our SA complexities such as crime and fraud and complete lack of customer service in most of the industries).

 

[DrJohnZoidberg]

Not sure when it happened but saw this morning that Biosonline.co.za is also closed.

 

[kianm]

Have2have had to go, what a rip off. Next is wantitall they should also scram off

 

[cozinsky]

I purchase my computer equipment from Titan Ice. I found them to have the best selection, prices and communications. For other merchandise I would buy from Takealot or Makro. I never heard of Purple Fly and the others. http://titan-ice.co.za/

 

[cozinsky]

Have2have had to go, what a rip off. Next is wantitall they should also scram off

I bought a few things through Have2have like Roku3 which is not available here. They were quite expensive so I only used them as a last resort.

 

[kianm]

I bought a few things through Have2have like Roku3 which is not available here. They were quite expensive so I only used them as a last resort.

Takealot has the roku3 now though. Not sure how long back it was for you, how much did you shell out for it btw?

 

[DrJohnZoidberg]

I bought a few things through Have2have like Roku3 which is not available here. They were quite expensive so I only used them as a last resort.

It's a lot cheaper getting it directly from Amazon, or if you want to you can get it through Takelot these days (but wasn't the case when I got mine).

 

[diabolus]

Yea i must say, if you live in a main city (JHB/PTA/CT) the brick & mortar shops are kicking alot of arses if you are willing to drive around.

Just the other day i ordered an Aeropress from YuppieChef for R500, great service, fast delivery and all that. Yesterday, i walk into some random coffee shop in a local mall in Pta , and there sits the same thing on the shelf for R450. This is like a tiny "cornershop" thing, not a main retail chain. Needless to say, i bought all the accesories at the shop there instead of online (even that was cheaper than both Takealot and YuppieChef).

Main reason i use online shopping (and i did not see it in all those stats as to "Why buy online" , funny enough) : Research + Reviews + Price Comparisons = Making Informed Purchases .

In a retail shop it's difficult to quickly compare products and watch a few youtube reviews . Online shopping you can do all that and then you can click "buy" .

I must add , computer parts and hardware is totally different category. You MUST do your research to buy these items and it tends to be very specific right down to product codes. So online shopping is much easier to get it right and it is quite rare for brick & mortar stores to keep stock of these types of items. However they can get it from the same suppliers , just like any of the online stores for the same price, so the competition must be break-neck.

Other products is tricky, there i feel it is about "having a variety" . If Dion-Wired is only selling Delonghi branded machines, but YuppieChef is selling all the brands, i would do my "window shopping" online up to the point where i know it is difficult to find it in an actual retail store.

 

[Gnome]

It is clear that Alibaba/Amazon will enter the local market within the next 5 years (they have to, as Walmart is currently pushing in) and it is doubtful that an Amazon/Alibaba would buy out Takealot (which would go at a 3-4bn Rand valuation) - this would be cash wasted and Amazon for example has been very efficient in opening up local offices.

That almost certainly will not happen. I really don't know what you base you evidence on but Amazon is almost certainly not going to open a retail store here anytime soon.

Confusing the local Amazon call centers for Europe and AWS in SA with signs that Amazon are opening a retail store here is bad evidence to say the least.

 

[fruitbat]

I have bought laptops from wootware.co.za as well as other items. I have however always driven to fetch it as i prefer not to ship computer hardware.
Takealot has been amazing and i will use that before going into brick and mortor. Why? Its quick, have had impecible service, and the delivery guys are always nice.
Kalahari has been horrible. I'm glad to see it go. The site is crap, they split up orders a LOT, and space them out days apart. so why not just wait and consolidate it?
I'm planning on getting back onto online grocery shopping soon too... just to safe time.

Because Time = Money!

 

[JustAsk]

Online shopping is NOT an industry.The sooner SA got that the better. Retail is retail, whether it is online or offline.

SA is horrible with ecommerce. Higgins is correct and i've been saying that for years, brick 'n mortar needs to get online, and i don't mean just a limited range like they mostly do, but get your fcking stock online and sync it with your offline stock. You sell 100 Samsung tv's a day, whether you sell them online or ofline is irrelevant. But no, the idiots is stil trying to get you in the store,completely missing the fact that impulse buying is also possible and sometime even easier with online shopping.

SA business approach to online shopping currently is to just duplicate what worked in the UK/USA here. That's a big mistake. You need to adopt to your market in every way,not try to make your market adopt to your 1st world duplicated strategies.

Imo, the best examples in Africa for ecommerce are Jumia and Konga from Nigeria. Both started in 2012 and already operating in many African countries with big success. Both heavily adopted their online business to their local market. They use whatsapp mainly to communicate, not because they wanted to, but because their market is there. They offer real COD payment options to deal with the lack of credit cards. They built big moerse warehouses, as big as stadiums to deal with stock. They have branded trucks with some of their stock driving around, showing customers they really exist,letting them touch,feel and test their products. They have their own fleet of delivery motocycles and vechiles, moving stock from little hubs all over the country.They even have agents equipped with 3g phones and a catalog to go into the most remote areas with no internet to get orders.
Now that's it how you effectively localised your business. THese guys solve problems, they get around obstacles, they don't sit back and moan about the poor state of online shopping.

With Naspers invested in one and JP Morgan in the other you can see why.

 

[MagicDude4Eva]

That almost certainly will not happen. I really don't know what you base you evidence on but Amazon is almost certainly not going to open a retail store here anytime soon.

Confusing the local Amazon call centers for Europe and AWS in SA with signs that Amazon are opening a retail store here is bad evidence to say the least.

There is no confusion about AWS/call-centres and the retail business. It is just a very logical next step for international retailers to enter the african market via South Africa. I did say within the next 5 years and I am quite confident about this statement. People had a similar sentiment a decade ago about local POPs of various providers and looking at it now we have Akamai, Cloudflare, AWS, Dyn (and a number of others currently provisioning in SA).

Many internationals (such as Rocket Internet) have invested heavily in the african e-commerce space and this is not very obvious to most. Neither Kalahari nor Takelot have ever made an indication when they would turn profitable - it is really meaningless to post 1bn turnover in 5 years if your opex burn by then would have been a magnitude of that (and no doubt requires another 1bn funding run at least). Look at Flipkart for example (they have had 12 funding runs totalling 2,5bn USD and they ship several million products per month - this scale does not exist in South Africa).

Don't get me wrong, what Takealot/Naspers are doing is the right thing, but one should ask if Naspers failed in pretty much every e-commerce venture (in most cases for very obvious reasons) and the same people have now a 41% ownership it is questionable if this will guarantee success in the end.

 

[Raru]

So far this has been an very interesting discussion on this Friday, with the comments here, and on the article side.

You get the idea, to paraphrase Bismarck, "Everyone likes sausage (ecommerce), but not one wants to see how it gets made."

There is a bit of a global battle being waged by a handful of companies in various emerging markets like Brazil, Nigeria & India to name a few. South Africa is just one of the places which has been caught up in this skirmish, with some kind of truce arranged for now.

 

[Hitchcock]

Online shopping will not work in South Africa, not now and even less so in future.

The biggest problem we currently face in this country is affordable access to the internet, as well as an educated and financially sound population.

The fact that government and private organizations employ 5 million+ people in this country, and all these institutions have Internet access, does not mean 5 million+ people have access to the Internet. I know that this figure is generally included in South African Internet usage statistics and it is wrong.

The fact that there are 20 million+ mobile phone users in South Africa does not mean that 20 million+ people have access to the Internet. More than 15 million of those users does not even know what the Internet is, what they can do, have data bundles, let alone the money to spend online.

I personally think that our true active Internet users in this country is about between 3-5 million users. Less than half of these users, around 800,000 - 1.2 million users, actually have the money to spend online.

Our internet market is too small. The majority of our population do not know the internet or have the money to spend online. As time progresses here in SA, our economy is failing all possibilities for future internet ventures.

The quicker South Africans get to grips with this, the quicker they will put this issue to bed. The large companies have been there before, they have all failed and are continuously looking for ways to get out of this mess.

Online shopping will only work in the Western nations at this time.

 

[MagicDude4Eva]

Online shopping will not work in South Africa, not now and even less so in future.

I disagree based on the insights I have (granted - the bidorbuy business model is different to a traditional online shop). We have seen steady growth year-on-year and the growth does not correlate with the internet penetration. I think although there might be a bit of truth in the comment of "the poor internet penetration in SA is the main cause for the lack of growth", there are many more factors to consider. Local e-commerce shifts quite quickly based on the problems experienced - when for example SAPO went on strike for more than 5 months, sellers shifted very quickly to alternative shipping methods and this did not result in a drop in sales. In some instances it improved sell-through, as a quicker shipping option (courier) was offered and consumers had no issue to pay a premium for this.

The broadband stats about this country is wrong - for example the reports of some local sites having in excess of 5m unique visitors is just not true. It is correct that more than 10m people have internet access, but just because you have Facebook and a browser on your phone, does not mean that that person will be able to shop and pay online.

The local internet market is very sustainable and has some very innovative technology (hardly anywhere else is EFT as a payment as popular as here). Many of the adoption issues can be blamed on payments (PASA and local banks for the shoddy implementation of 3d secure) and the reluctance of local banks to properly support internet shopping. Almost every local payment gateway was compromised and with credit card fraud rife, it is understandable that consumers are reluctant to swipe that card.

 

[cozinsky]

Takealot has the roku3 now though. Not sure how long back it was for you, how much did you shell out for it btw?

I bought the Roku3 when it was just launched, a year or two ago. I paid around R1800. Good to see Roku is now available on Takealot at a reasonable price. I think it is a great little streamer.

 

[HideInLight]

You know what I miss, a reliable post office where I can ship counter to counter. I can't always stay at home and wait for a parcel to be received, sometimes I would prefer to just go fetch it.

I live is a small forgotten town though, so shipping things in is the only way I can get them without driving 100km.

What we could also do with is Virtual prepaid credit cards, like Walmart sells overseas in their physical shops.
A card with a number is much easier to use than a smartphone app, multiple linked accounts etc.

In fact, that's what takealot needs to start doing, selling vouchers in brick and mortar stores.

 

[NGR]

Online shopping will not work in South Africa, not now and even less so in future.

I too, disagree with this statement. Naturally this discussion caught our attention, as e-commerce is our thing - we have been running since 2002 - profitable since 2004 and are still going strong. We actually had a discussion in the office today and once Kalahari mergers, we think we're most likely one of the oldest online stores still in business...

I sadly feel that what seems to be happening is that companies are failing to evolve and keep up with current trends. We run a number of sites, all of them profitable - by streamlining our processing procedures and being first-to-market for a number of payment technologies and processing procedures we have definitely kept ahead.

Most of the stores closing down seem to be electronic e-commerce stores, the most brutal project you can embark on. My feeling on this has always been simple; If you have any sort of technical knowledge and want to open up a store - you most likely are a PC geek of some sort, and know who the big PC distributors are. Opening accounts with them is super easy - so you naturally go this route. Back in 2003 our margins sat at 16%, there are PC stores now with margins at 3% - and you cannot survive with a margin so low. We see PC stores open everyday, and a month later they have closed down....

Let's also remember that Takealot does play a role here, they were and are selling items for lower than what most of the smaller stores can source the items for - and along with free shipping, the price conscience consumer will head their way. One massive lesson we have learnt along the way though, is that low price does not constitute customer loyalty. We spent tens of millions advertising and discounting products and sold them way below cost with next day delivery together with one of our marketing partners - and only saw the majority of customers returning again to purchase loss-leading items. This seems to be Takealot's strategy too - according to the media they are still not profitable, and are burning through money to acquire customers, and it will remain to be seen if it pays off for them. This merger definitely is interesting, and we are excited to see how it changes things around.

SA shopping is definitely not in a crisis though - we continue to see 100%+ growth year on year. It does need a massive amount of work to succeed though, and is definitely not as easy as most people think.

 

[Swa]

I'm an average 30 year old that is computer literate but for some reason the only things I buy online is a book once a year from Kalahari. I have not really found the value in buying things online.

The problem is that the online shops are becoming just like brick and mortar. The attraction used to be range of products. Now they are shifting into the territory of buying large but limited stock to sell for less. And the little guys can't compete against this. I was in the process but for this reason never took the final step of starting up. Now I'm glad I didn't and only use it to buy for myself.

If something is cheaper at Takealot having been stocked en mass I buy it there but if it's something they have to order I can usually get it for less.

I am still curious on how brick & mortal Computer shops remain open. I recall the 1990 heydays of the PC in South Africa where computer shops were abundant, floundering and closing doors at the turn of the century. Unless it is only in Gauteng, the computer shop is opening its doors again with pricing competing with most online PC hardware retailers.

I have seen a number of them pop up and close down again. It's only the chains like Matrix that are flourishing. I know someone that worked there and you could get the stuff at less than 60% of the retail price then that wasn't even the cost price. They are making a killing from purchasing in bulk but the range is poor.

- The new entity will build two 30,000m2 warehouses - if you look at latest technology in warehousing and if those warehouses are build from scratch it will cost about 80-100m per warehouse

One more problem. In order to compete on the level that they want they have to physically stock all products. Defeats the purpose.

The local internet market is very sustainable and has some very innovative technology (hardly anywhere else is EFT as a payment as popular as here). Many of the adoption issues can be blamed on payments (PASA and local banks for the shoddy implementation of 3d secure) and the reluctance of local banks to properly support internet shopping. Almost every local payment gateway was compromised and with credit card fraud rife, it is understandable that consumers are reluctant to swipe that card.

This is actually a problem. Other countries have much easier access to credit cards so they don't need EFT. Here you need a mega salary before the bank will even consider you for a debit card. Luckily Capitec has taken the first step to change that.

 

[MagicDude4Eva]

What we could also do with is Virtual prepaid credit cards, like Walmart sells overseas in their physical shops.
A card with a number is much easier to use than a smartphone app, multiple linked accounts etc.

I saw that Dischem sells them - I must actually check this out and see how it works (i.e. how you preload them and what the charges/fees would be).