Subscribe

The big and small of e-commerce

Joanne Carew
By Joanne Carew, ITWeb Cape-based contributor.
Cape Town, 05 Feb 2015

With the Competition Commission recently giving the go-ahead for the merger of online retail behemoths takealot.com and Kalahari.com, the notion of starting a small niche business can seem intimidating.

Despite this, the overarching sentiment of a panel discussion at the eCommerce Africa Confex yesterday was that small businesses actually have a number of unique opportunities.

For Gary Novitzkas, CEO of health and wellness e-retailer Juniva, the size of the business shouldn't really matter; what matters is how the business is doing financially. "In terms of business size, I don't really think it is that important. It is about being able drive users to your site, whether you are able to generate traffic, attract new customers and encourage existing customers to keep coming back," he said, adding that having a large business doesn't necessarily mean you have a successful business.

According to Dinesh Patel, CEO and founder of food ordering start-up OrderIn, one of the advantages of being a small business is you are willing to do things larger and more established brands are not so willing to do.

"The grassroots marketing you do as a small business means you have to come up with unique and creative ways to communicate with your customers. And while this might seem insignificant, it goes a long way." He continued that larger companies often find it more difficult to build and develop a brand culture. "With a smaller team, it is easier to keep that love for what we are doing alive."

Smaller businesses may struggle to compete with the big boys in terms of financial backing and access to resources, but this just means they have to be more creative, said MD of online wine retailer Cyberceller, David Muller. "Small businesses need to build a strong brand that customers trust." He went on to say one of the many benefits of running a small business is you are closer to your customers.

Gary Hadfield, CEO of loot.co.za, believes being small means nothing can be disguised or hidden from the consumer, which makes the organisation very conscious of what they are doing. And when a small business is successful and begins to scale up, those in charge can easily track what behaviour is behind an upward or downward trajectory, Hadfield added.

Phaedon Gourtsoyannis, founder of Cape Coffee Beans, cited ownership as one of the main advantages of having a small business. "A lot of the people on this panel have left larger organisations for the opportunity to run their own business and be more responsible for the success of the business." He pointed out even the likes of takealot.com or Amazon are not that large when you compare them to some of the big global brick-and-mortar retailers.

The panellists offered some advice for small players looking to establish themselves in the South African online retail space. Start-ups must get the basics right and then plot out the business' strategy and overall business model, noted Hadfield.

They all stressed small online merchants need to identify what advantages they have and capitalise on those, rather than attempting to compete with larger, more powerful companies.

Spending too much time focusing on your competition is really dangerous, according to Gourtsoyannis. "If you think you are going to enter this market now, and compete with any of the big players, you are kidding yourself. You should be thinking about executing alternative strategies," he said. E-commerce companies in the US that have found success have all implemented strategies vastly different from any of the incumbents already in the market, he said.

The idea that e-commerce businesses have to be shipping a specific product or service is a misnomer, outlined Patel. It requires you to change existing infrastructures and create your own marketplace that will solve a specific problem and ultimately have the potential to disrupt an entire industry, he added.

"It is about taking initiative. And breaking away from the pack," stressed Muller. "You have to be smart. You may never become a takealot or Amazon, but you can become a success by identifying an unaddressed need and meeting it."

Share