Pick ‘n Pay proves a point by coming late to the Internet party
David Shapshak
There are many advantages to coming late to the Internet party, as late-comers to the Internet boom were fond of pointing out. This line of argument was popular at the height of the dotcom mania often to boost shareholder confidence but also when arriving after the initial maddening flurry made life a lot easier. All the mistakes of the pioneering firms could be avoided. Certainly in one local case it has proven to be the point.
Pick ‘n Pay, the country’s largest chain of grocery stores, launched its online shopping service in the past few months and has had an unexpectedly strong uptake.
“It’s taken our breath away,” says Adrian Naude, the general manager of Pick ‘n Pay Home Shopping.
It has seemingly taken the breathlessness of in-store shopping out of about 16 000 people’s lives who have registered for the service since June 25 when it first rolled out in Pretoria, then a month later in Cape Town and a month ago in Johannesburg.
Part of the success, says Naude, is the time taken to “get it right and we used our own infrastructure. Retail can’t support a start-up. What we have going for us is we are Pick ‘n Pay and we have a wide range of goods and the lowest prices. We can’t take the credit for that, but we’re able to tack on the side of that.”
Many highly publicised online shopping ventures have floundered for a few reasons: the high cost of setting up business (or e-business) and the associated problems of having stock, delivering it and keeping the customer happy.
Some services launched as standalones, utilising existing stores’ inventory, but failed to make the Mr Delivery model of sourcing from numerous vendors work.
One is the Wooltru Group’s inthebag. co.za, which has been through a tough time, forcing Woolworths, whose products made up 70%, to take its running in-house. They are also reportedly changing the distribution model from a central distribution point to a pick-from-store model.
Pick ‘n Pay must be sighing with relief that it waited, for a variety of reasons. The fulfilment of an online shopping spree is done through the nearest Pick ‘n Pay Hypermarket, the largest of the chain’s stores, and the items offered to buyers are based on the inventory available in that store.
It has also been able to draw on its own infrastructure and has the high-profile brand awareness that many other online ventures have had to dole out serious adspend to create.
“There are a lot of things in our favour,” says Naude. “Our costs have been lower because we are able to use our own stores. People buy groceries from Pick ‘n Pay already, so it’s easy to break even.”
The online store has a database of 20000 line products or more realistically whatever you find in the Norwood Hypermarket, you would find online in groceries, says Home Shopping’s marketing manager Erica Warner.
The launch’s rationale, she says, comes from the requests of their customers. “It’s also keeping up with times, seeing that this is the way it is happening. It is not as big in South Africa as it is internationally and there are very successful models, such as Tesco and Sainsbury [in Britain]. We are unashamedly based on them but are a lot less excessive than other sites.”
Pick ‘n Pay has not been willing to reveal how much it has cost and neither Naude nor Warner would comment on the oft-quoted R20-million figure tied to its set-up costs. By comparison, inthebag’s set-up costs were R38,7-million, while its losses at the end of last year were R26-million, according to online news service ITWeb.
Ultimately though the proof is in the pudding. From my first online shop experience it is clear that waiting, and doing its homework, has been in Pick ‘n Pay’s favour.
It is very similar to other online shopping ventures, but for those unfamiliar with online shopping it will not take long to navigate the simple, if ungainly, interface. You will first be required to register and provide the geographic details of where you live or where you want your groceries delivered enabling Pick ‘n Pay to match you with your nearest store.
The site will never win any design awards but using three navigation windows (step one, two and three) you can select the broad category and hone it down (groceries > dairy products > butter). A fourth and larger field displays the items in that range, which in this case would be all the brands of butter. This tabulated field can display the items by name or price and shows a small thumbnail of each product. You then select the number of items you want, add it to your “trolley” and roam around other categories, or aisles, “shopping”.
At the end you have the option to review your items and select substitutions if the particular product you want is out of stock and convert it to a shopping list for future purchases.
I took the trouble to build up a few comprehensive lists for monthly shopping, cleaning products and fresh produce. The site offers the option to compile this for you based on any recent purchases. This failed to work for me, but appears to be related to the unexpected initial load of customers. Alternatively you can search for familiar branded products and add them to your trolley that way.
Purchases are credit card-based and a standard delivery fee of R35 is charged. Fresh food comes in sealed containers.
The only problems Pick ‘n Pay seems to have encountered from waiting is an overeager population that initially flooded the site and one of their delivery men being attacked by a dog.