THE SOUTH AFRICANE-COMMERCE LANDSCAPE

A Snapshot, Aug 2013

• South Africa has been comparatively slow to embrace the internet and e-commerce in general

• Historical factors behind this have been limited disposable income, poor internet infrastructure (broadband penetration), expensive data, expensive hardware & low trust in e-commerce fulfillment

• Geo-demographically we have not suited ecommerce (large land mass, with poor logistics infrastructure)

• All of the above factors are moving in the right direction: increasing, cheaper broadband penetration, rapid increase in smart mobile devices, more trust in e-commerce

• All indicators is that this will improve both steadily and exponentially in years to come

Historically Weak

• 13-15 million with online access (approx. 37% penetration)• High correlation between internet access and high

disposable income• Dense population of active online buyers in Gauteng &

Western Cape• Daily deals sites woke us up to online transactions 2 years

ago• Mobile penetration is large and growing• Home products are growing (dionwired, hirschs,

yuppiechef, 5Rooms)• Facebook is by far the most dominant social media

platform

Getting Stronger

Dominant local players

Kalahari – general merchandise

Groupon

Bid or buy – general merch Takealot – general merch

OLX (classifieds)

Zando (fashion)

1. Yuppiechef (kitchen, home & garden)

2. 5 Rooms (décor & garden)3. Gumtree (classifieds)4. Pricecheck (price comparison

portal)5. Wantitall (general merch)6. Citymob (curated flash sales)7. DionWired (appliances &

electronics)8. Woolworths (bricks and clicks

department store)9. Mr Price (bricks and clicks apparel

retailer)10. Loot - GM11. Vuvuplaza (group buying)

Also worth looking at

SA eCommerce Companies

Who owns who

Who owns who

Also own tencent and mail.ru hence the very long pockets. Can burn through cash.

Who owns who

New York based investment fund. Also have shares in many other big name global tech players.

Who owns who

Rocket (Oliver Samwer & bros.) grew Groupon globally and are known for aggressively cloning known US based internet biz models before exiting and moving on .

Who owns who

So most of the large and ‘successful’ ecommerce brands in South African are not making a profit. They have invested huge amounts of money in brand building, technology, operating costs and people but may never be profitable. If they manage to take a very long view however they should enter the black over time.

Most profitable ecomm co’s to to date would appear to be Groupon, Vuvuplaza, BidOrBuy, OLX & local independent yuppiechef.

Reasons for profitability: Groupon & Vuvuplaza sweat other companies assets + did not require too much investment deep tech or inventory to succeed . The classifieds model (BoB & OLX are zero inventory co’s). Yuppiechef was bootstrapped between friends and grew organically over time.

Some Key People

Oliver Rippel

Andy Higgins – bidorbuy founder and current CEO of uAfrica.

Kim Reid – Takelot CEO. Ex-Naspers/MIH

Manuel Koser - Zando

Emelian Popa – 5Rooms

Daniel Guasco & Wayne Gosling – Groupon SA

Andre De Wet - PriceCheck

1. Google South Africa2. Facebook3. Google4. YouTube5. Yahoo6. Gumtree7. Wikipedia8. LinkedIn9. News2410.Bid or Buy11.Twitter12.First National Bank13.Blogspot14.StandardBank South Africa15.ABSA16.Windows Live17.Amazon18.Independent Online19.WordPress.com20.Microsoft Corporation

TOP 20 (ALL) SITES: TRAFFIC

91% of South Africans who shop online are happy with their overall experience‚ while 76% return to an online shopping site that they have used.

MasterCard Survey 2013 SATISFACTION

79% stated that they want free or minimal delivery or shipping charges.

MasterCard Survey 2013 EXPECTATIONS

The most crucial consideration, indicated by 90% of respondents, was secure payment facilities and convenient payment methods.

MasterCard Survey 2013 EXPECTATIONS

Only 29% of online consumers' purchase occasions came from foreign websites‚ a 5% decline compared to the previous survey.

MasterCard Survey 2013 LOCAL V. FOREIGN

Websites selling books, CDs and DVDs were the most popular, with 42% of respondents having visited these sites in the last three months. Home appliances and electronics took second place (35%).

MasterCard Survey 2013 WHAT PRODUCTS?

13m people online4.6m have been online for five or more years and are comfortable shopping.

By 2018 Goldstuck calculates there will be 18.4m people online and of these 13.2m will have the propensity to shop.

MasterCard Survey 2013 KEY NUMBERS

Online retail revenue has grown from R2.6bn in 2011 to R3.3bn in 2012 and is expected to hit R4.2bn this year.

This is less than 2% of total retail in SA – but at this rate of growth local retailers are beginning to take note.

MasterCard Survey 2013 TOTAL MARKET SIZE

SOCIAL MEDIA TOP BRANDS

TOP MEDIA BRANDS ON FACEBOOK

patrick@uxfoundry.co.za