Online shopping in South Africa has (finally) come of age
South African websites have only just begun to tap into the huge demand there is for online shopping, writes Alistair Fairweather.
If I told you online shopping is the next big thing to hit South Africa, you might think I was living in 1995. So called experts will tell you big brands like Amazon and Kalahari have the market sewn up. They have the scale, the supply chains and the deep pockets to completely dominate the market – so don't bother. And yet the space is flourishing, with new local players popping up every month.
Take Zando – an online clothing store that has exploded onto the local market. Launched less than a year ago, the company has recently attracted a "three-digit million-rand" investment from JP Morgan, a large US investment bank.
Zando's model isn't particularly original. It's essentially a clone of successful global sites like ASOS. What makes them stand out? A combination of attractive presentation, excellent usability, smart merchandising choices, good stock control, and reliable delivery have earned the store droves of loyal customers.
But Zando is a mere pup compared to the granddaddy of independent local e-commerce. Yuppiechef, now the darling of the space, has been selling high-end kitchen tools since 2006 – long before the current boom. The perseverance and ingenuity of its founders, who struggled for years to make ends meet, is now the stuff of legends.
Like Zando, Yuppiechef has made a virtue of presentation. Unlike the "big box store" model used by the likes of Amazon and Kalahari – which favour infinite choice at the lowest possible margins – Yuppiechef concentrates on making a few carefully selected products look as beautiful and enticing as possible.
It's the difference between buying a new knife at Makro, versus buying one at the beautifully dressed local store with the friendly guy who can advise you on which sharpener is best for the imported chef's knife you've been coveting for so many months. The knife may be the same, the experience is not.
What the new breed of online shopping brands have realised is that customers actually like to have their options narrowed down for them. Faced with infinite choice, most consumers either freeze or flee. And so these stores have become curators – carefully selecting the best or coolest new items – rather than dreary wholesalers who make everything they touch seem cheap.
A local start-up that has taken this model to its logical extreme is CityMob. Offering only a few dozen carefully selected products at any given time, CityMob thrives on scarcity. It's products come from across the spectrum of shopping – everything from home decorations to gadgets to clothing. But all of them share three characteristics: they're fashionable, they're unusual, and they're in limited supply.
By presenting customers with only a few extremely compelling or fashionable products, CityMob transforms the online shopping experience from mundane outcome seeking – "I need socks, let me go to Woolies" – to delightful discovery: "That so beautiful! I have to have it."
Speaking of socks, another new entrant is perhaps the most niche local store of all. Nic Socks intends to make the most boring item of clothing – men's socks – desirable again. The store is a "passion project" for Nic Haralambous, the serial internet entrepreneur who recently sold his previous company, Motribe, to Mxit.
All of Nic's socks are locally sourced, designed and manufactured. They're made of silky bamboo fibres, and each design is limited to a few hundred socks. Like many of his compatriots in this new wave of online shopping, Nic realises the value of the intangibles: scarcity, simplicity, beauty, attention to detail and the power of a good story.
And he's in good company. Newly minted local brands like 36Boutiques, Hello Pretty, Africandy, 5 Rooms and Utique are challenging the ugly bargain basement mentality of online shopping. Though they span a whole range of products and industries all of them share a focus on design rather than price and on a curated shopping experience rather than a sheer volume of choices.
What's driving the boom? A few factors have simultaneously kicked into high gear. Firstly ecommerce technology, once extremely expensive and complex, is now well within reach of entrepreneurs. Secondly, we're reaching a tipping point for affordable broadband access at home – particularly among middle class South Africans. Third and perhaps most importantly, there's currently a huge vacuum into which these businesses can expand.
With the notable exception of Mr Price, large local retailers have done a spectacularly bad job at serving the online shopping market. As a result ordinary South Africans have taken to buying from international sites in droves, despite the high custom duties and long waits involved. This represents a huge pent-up demand that local players have only just begun to tap.
The likes of Truworths and Edgars may sneer at the current size of the online market, but that attitude will come back to bite them. This new breed of brands may make ecommerce look effortless, but it's really extremely tricky to get 100% right. They'd better wake up soon, or the sideshow will become the main event, and they'll be out in cold wondering what happened.