While more than 66% of SA are regular mobile internet users only 1.4% go online to shop. Quite dismal? Maybe not. “When it comes to online sales I’m positive on growth. You will see online sale volume of 1.4%, go up to 4% of total retail spend. Its growing at a clipping rate of 40-50% year-on-year,” says Clive Butkow, who runs Kalon venture partners, a South African fund who has backed companies like Sendmarc, FinChatBot, Mobiz amongst others.
Clive along with Paris Philippou, Vice President for eCommerce & Digital at Massmart, a Walmart company that also runs retail stores like Game in the country, appeared on the first episode of Africa Tomorrow, a subscriber-only video format conversation around the key trends that are shaping the future of technology in Africa.
According to a Visa survey, as high as 63% of South Africans prefer to make purchases at a mall, and about 76% visit a mall at least once a week. Is it a strong tug towards the physical shopping experience or is it an inability to shop online. “There are many barriers to shopping online. In a retail store, you’d pay in cash. Whereas online you need to have the credit/means to shop. Another real issue is a physical address – to which the product has to be delivered to. Many people don’t have that,” says Paris Philippou.
Sitting on a quarter of a billion rand, Butkow says, “We won’t invest in anything less than a 10X return on capital. We look for a good founding team, nice domain and a lot of traction in the marketplace. And e-commerce is something we have certainly placed our bets on.”
Innovation, the two retail veterans say – is the key to successful business models. “Look at the “take now -pay later” model it is successful. In my personal capacity I have invested in a company called M-Post in Kenya, which if you don’t have a home address — converts your mobile number into a physical door that you could actually send your goods to.”
But shopping online is not without its trust issues. Not a day goes up when our newspapers don’t tell us about some scam or the other. If you want to hear about how Clive Butkow became victim to an online fraud or what Paris Philippou thinks of ease of payment.
In this episode, Clive & Paris, our 2 experts on retail in South Africa speaks to Rishabh Lawania, Founder of Wee Media (parent company of WeeTracker) and brainstorm on the future of eCommerce in South Africa.
The full video is available for WeeTracker’s annual subscribers. Subscribe to our annual membership here