VENTURES AFRICA – Egyptian billionaire Mohamed Al Fayed, worth a cool $1.3 billion, is no stranger to controversy. Whether it’s selling the famed Harrod’s department store in London to Qatar Holdings, making outspoken interventions into English football or financing documentaries accusing the British royal family of complicity in the deaths of Princess Diana and his son Dodi, there is always a story to be written about the controversial businessman. Yet his return to retail with the purchase of online designer discount store Cocosa is a smart move, based on a strong belief that the future is in online shopping.
“The future of retail is online; of that I have no doubt,” he says. “I had always loved the sales at Harrods, where thousands of people who couldn’t usually afford to shop there, could snap up clothes they’d seen in their favourite style magazines. At Harrods, the sales only came twice a year. At Cocosa they come every day.”
The move has been interpreted as the start of an online fashion empire for Al Fayed. Cocosa was launched in 2008, and hosts over 50 fashion sales every month, offering discounts off labels such as Alexander McQueen, Alice Temperley and Halston Heritage. Online shopping is established but still growing in the west, but the rest of the world is also beginning to get the hang of it. Africa, in particular, is primed for real growth in the sector.
Two of South Africa’s best-known online retailers, Exclusives.co.za and Kalahari.com, have been booming and looking to expand into mobile shopping. Growing web penetration has aided this sustained acceleration. The Online Retail in SA 2011 study shows that the total spent on online retail goods in South Africa passed the R2 billion ($2.37 million) mark in 2010 for the first time. The industry expects 40 percent growth this year, the highest ever.
“This dramatic rise in online retail comes in the wake of an ongoing increase in the number of experienced internet users in South Africa,” says Arthur Goldstuck, Managing Director of World Wide Worx. “Last year there were 3.6 million people who had been online for five years or more. By 2015, that figure will be 6.8 million – almost double the potential e-commerce market of today.”
E-commerce is also expanding in the rest of Africa. MIH, Kalahari.com’s holding company, has launched Dealfish.com in East and West Africa. Dealfish is a moderated online classifieds company that connects buyers with sellers. Local companies are also looking to gain a foothold as more people develop the urge to shop online. Kenya’s first online ticket purchasing site M-Shop is gaining in popularity with more and more companies looking to use the platform. Founded in 2011 as the first platform to allow Kenyans to book anything from travel to cinema tickets online, the company is striving to add as many companies as possible to make ticket-booking an easier experience for Kenyans. Online booking is common across the world but until the advent of M-Shop Kenyans had been forced to physically purchase their tickets, often facing long queues.
“M-Shop was inspired by the idea that it is very difficult and time consuming for Kenyans to book tickets for buses, airlines, events of cinemas,” said Marcel Auja, the man behind M-Shop. “M-Shop filled a big gap in the market by providing a ticketing platform that is needed by both consumers and merchants. To consumers it provides hassle free mobile ticketing and payment while to merchants, it provides a paperless ticketing and a large customer base for their businesses.”
Those looking to enter the field of online shopping have focused on a strategy of marketing the better pricing that online shopping has to offer. Online prices must beat the prices in physical stores and this has to be communicated effectively. Commitment to delivery is also vital, delivering what has been purchased within the time promised. Finally, security is key in attracting and retaining online shoppers. Aside from the lack of technology, the one thing preventing online shopping from really taking off across Africa is a lack of faith in the security of transactions online.
It seems that e-commerce really is the future, in Africa as well as elsewhere. If Mohamed Al Fayed really does intend to build an online retail empire, he may do well to look a little closer to home for his market