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Online has levelled Africa's retail playing field

By , Portals editor
Africa , 19 Jun 2015

Online has levelled Africa's retail playing field

The proliferation of mobile technology and increasing awareness around the need for online security bodes well for the entrenchment of mobile-driven ecommerce in Africa. While heavyweights like Jumia , Konga, Kyamu, OLX and iROKO continue to make inroads into fast-paced, high volume markets like Nigeria and Kenya (and the industry still feeling the impact of the merge between Kalahari and takealot.com), what opportunity is there for a relatively unknown player to stake a convincing claim in the Africa e-tailer market? – one that Frost & Sullivan predicts will be worth US$50 billion by 2018.

Pretty good actually says Clive Maher, managing director of EET Europarts, a Johannesburg-based global retailer and distributor of video surveillance, spare parts and accessories for computers, printers and mobile phones.

The company serves as a preferred supplier of global brands to customers who provide maintenance and support services. "We make sure our clients are then equipped to fulfil supply and service contracts to their clients," says Maher.

Established in 2006 as a business focused primarily on printer parts in ICT, the company has added fast moving items like electronics, security solutions and consumables to its portfolio.

2013 marked the company's officially entry into the ecommerce space after a fully automated online trading component was integrated into the business.

Online traders can source stock from EET Europarts who, in turn, have inventory situated locally and have established a direct supply chain to international headquarters and central logistics centre in Ballerup, Denmark.

Maher says today the business has stock in excess of over 600 000 line items which he says differentiates EET Europarts as the largest online IT and retail supermarket globally.

It is an aspect of the business the company is keen to expose to the Net, particularly because analysts project the local market to grow – a notion supported by information online.

Research based on articles, blogs and announcement from operators like Google South Africa, World Wide Worx and KPMG, as well as market analysis commissioned by PayPal and FNB, suggests that South Africa's ecommerce space is likely to grow in 2015.

An article published by Business Day Live in February 2015 quoted Google SA country director Luke McKend as saying that the company sees "considerable growth in Africa's ecommerce space".

Technology industry analysts like Arthur Goldstuck have been quoted as saying that online retail is expected to grow 26% year-on-year in 2015.

Management consulting firm AT Kearney says the number of South African mobile internet subscribers is forecast to more than double in size – from 15 million in 2013 to 35.2 million in 2018.

In November 2013, KPMG South Africa posted a blog The growth of online shopping in SA which stated that the value of online shopping in SA is expected to grow to approximately 2.5% by 2016.

In January 2015 an article published on Cape Business News made reference to eMarketer as having estimated that business-to-consumer e-commerce sales worldwide will reach $1.92 trillion in 2016.

Meeting the demand

Soon after sorting out its ecommecial logistics, Maher gathered as much database information as he could and applied a blanket communication approach to gage the level of response from the Africa market.

The aggressive direct 'mass mailer' communication worked for Maher and today the company serves as the supplier of choice for a customer in Africa who spends R200K + per month, tapping into EET Europarts' ecommerce capability.

But this mass mailer approach has now been set aside in favour of a more streamlined, organised take on the market. There is meticulous attention to the changing dynamics that have shaped this space and continue to characterise its growth.

"Traditionally Africa has been a challenging market... it has been difficult to secure credit and it works mainly on a COD basis," Maher explains. "This is changing..."

Ecommerce has forced a change in mindset and in business models, particularly in retail, with the convergence of business intelligence, integration with mobile infrastructure/ live streaming and other trends.

Maher says there is a growing demand for fast-moving items like portable chargers/ power sources, as well as electronics.

He also says the market is expanding and convenience (quick turnaround time on delivery and efficiency in supply/ logistics) outweighs price consideration.

The boom in Africa's mobile money services space and more focused attention by industry regulators to push up internet penetration levels means that traditional retailers who have moved into the e-tailer space, like EET Europarts, have more than a fighting chance to leverage the business opportunity.

The company has identified key regions in Africa for immediate trading, including Botswana, Kenya, Mozambique and Namibia.

All trading is managed through the South African operation, with physical offices in Johannesburg. This is the company's only Africa office, as Maher says, the capital outlay required to establish physical office presence in new markets represents a challenge and does not make sense for the business at the moment.

From inception, the goal of EET Europarts was to establish itself as 'a one-stop-shop' and solution provider taking care of the entire process, end-to-end.

The business has adapted its model accordingly, says Maher, and now customers have a choice in terms of how they want aspects like freighting and logistics to be handled. The company can manage this facet of the process entirely or assist with specific areas, or the customer can utilise their own logistics service operators, with EET Europarts ready to assist.

Maher and his team are motivated by the goal to offer better service every day in order to attract and retain "buying customers with bigger baskets."

"It is a numbers game," says Maher. "South Africa is five years behind in terms of ecommerce, but we have experienced a 30% increase in buying customers on our website. It is about influencing buying decisions."

For an e-tailer like EET Europarts, this means stock availability, choice for customers and the backing of a fully automated, entirely enabled system.

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