A leading Australian online retailer has partnered with a BEE group to create South Africa’s first online clearance marketplace. The new site, Going.co.za, is a trade and wholesale platform that provides a means of selling excess inventory, returned items, refurbished goods and other hard-to-sell products, in the electronics, stationery, clothing, toys, sports equipment and other categories.
New SA venture launches stock liquidation sales siteSouth African born Paul Greenberg, chief executive of the Australian National Online Retailers Association and founder of Dealers Direct Group, Australia’s largest online retailer that attracted billionaire James Packer as a high-profile investor in 2011, has partnered with black empowerment group, Amabubesi Holdings to launch the innovative site.
International interest in South Africa online sales
The partnership comes at a time when many foreign investors are now eyeing the South African e-commerce space. Over the last 12 months, Africa has seen a large increase in corporate investors attempting to steal a bigger share of the South African online retail sector.
After the success in Australia, Greenberg had been watching the South African marketplace for some time and was poised to take a leadership position in e-commerce. “Australia is now a mature market and Africa is being hungrily eyed by many players. We have been following the local online retail model for some time and there seems to be a three way investor war between Tiger Global Management, Rocket Internet and MIH, which belongs to Naspers.”
Greenberg, chairman of Going.co.za, believes that a gap in the local market exists for a marketplace where retailers, wholesalers, distributors and manufacturers from South Africa, China and other supply hubs can manage their reverse supply-chain headaches.
The site is a business-to-business marketplace. “As a global phenomenon, over the last decade or so we have seen a blurring of wholesale and retail, which we call ‘wholetail.’ This has largely been driven by compressions in the supply chain and more and more wholesalers and brand distributors becoming retailers. The site is focusing on selling bulk lots of various sizes, allowing resellers such as retailers, both formal and informal, to acquire discounted trading stock at opportunistic prices.”
Moving unwanted stock efficiently
The site is part of an emerging industry built on what will not sell in stores or on major online retail websites, essentially helping those stores clear their shelves and stock rooms. According to Greenberg, many retailers and wholesalers still rely on local traders who take away unwanted stock at short notice, much of which then finds its way into the informal sector and into other African markets. In comparison, the site’s centralised process brings efficiencies. The company determines the ideal lot size for a product, offers this product to buyers, manages the sales process, handles the final financial transaction and organises the delivery logistics. The company is set to change the game in the stock liquidation industry, which now remains highly fragmented.
The launch also comes at a time when small and medium size businesses are feeling the pinch because of the economic climate and are in need of a variety of good stock at bargain prices to take to market. “Small-business owners, hawkers, traders and entrepreneurs also are scrounging for deals. People are looking for where they can find a deal, save money and create a business opportunity. The site offers exactly this opportunity.”
He adds that retailers spend tens of billions of dollars on their supply chains but when product purchased becomes outdated, unneeded or oversupplied, that side of the business is unsophisticated and there is very little investment in technology.
Technology rapidly spawns obsolescence
“We identified a sector, which is 10 years behind and introduced an internet-based marketplace creating a professional sophisticated service, offering value to sellers and business buyers. We are seeing more products, from around the world, becoming quickly obsolete and unwanted by traditional retailers and channels. As an example, tech innovations create product obsolescence and big suppliers always want to be selling the latest item. In some cases there are new technologies replacing older versions every 12 weeks. The retailers want to get the new version to market and clear the older stuff quickly. That’s where we come in.”
As the retail sector globally feels some of the challenges as a result of fast changing shifts, there will continue to be issues with surplus inventory which in aggregate, including all the links in the supply chain (retailers, wholesalers, distributors, and manufacturers), amounts to billions of Rands. An efficient marketplace that brings together, in a frictionless way, vendors and buyers is not a new concept, but the company plans to develop not only the marketplace extensively and efficiently, but also the supply chain.
A few trends will play perfectly in this model. “Firstly, in growing African markets there is a deep focus on value. Secondly, the levers of e-commerce allow that buyers, especially businesses, are connected anywhere, anytime. A hyper-connected world is perfect for marketplaces like this. Thirdly, the transparency of online purchasing and ordering means that new concepts such as this can get traction much quicker. Lastly, improvements in African supply logistics allows for stock to be efficiently and safely delivered,” he concludes.