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Click below to listen to the Views & News Show on Cape Talk which aired on 1st February 2023, where Clarence ford interviewed Stock2Shop on the future of ecommerce.
For convenience, we have included a transcript of the interview below. Please note that it has been slightly paraphrased for easier reading.
Clarence Ford: Fact of the matter is South Africa’s ecommerce sector is experiencing rapid growth. And of course, just as commerce is evolving, so too are the technologies and industries that support the sector, and consumer expectations and demands are following suit. Constantly evolving technology, technology nearly being obsolete every six months, it’s a difficult terrain to navigate. And to help us navigate, we’ve got Grant McDonald, the Sales and Marketing Manager at Stock2Shop. Welcome Grant, it’s good to have you.
Grant McDonald: Hi there Clarence, thanks so much for having me on your show and hello to all your listeners.
CF: I’m fascinated. I’m in that generation now where I was trying not to… I didn’t want to embrace it but I was drawn in kicking and screaming, and I’m absolutely fascinated by what I’ve discovered. We are rethinking the sector already although it’s still early days. What is the future of ecommerce in South Africa? Clearly we haven’t kind of really come into our own as as compared to the first world, yet we are rethinking it. That’s my question.
GM: Absolutely, when you consider how far the first world has come, already in the region of 20% of global retail sales are done on an online device whereas we are, as you say, just kind of scratching the surface. We just recently hit the R50 billion mark, I think it was towards the end of the last year, but that still is only at around 5% of total retail sales. So yes, still early days, but the future is really exciting, and I think a great shot in the arm for ecommerce in South Africa was COVID. It was bad news for many companies out there, but the ones that were able to leverage technology and ecommerce came out smiling at the other end.
CF: Yeah, 5% of GDP as compared to what kind of? numbers? What percentages are they realising in the first world countries?
GM: So in the first world countries it’s sitting at around 20%. I’m not sure what that total value is, but in South Africa our total retail sales are little over a trillion Rand (about R1.16 trillion) so our R52 odd billion is sitting at around the 5% mark.
CF: So apples with apples would be comparing 5% in South Africa to about 20% globally. Would you say first world markets have reached maturity or are we still seeing growth in the ecommerce sectors?
GM: I’m still seeing growth. The numbers that I’m seeing, looking at a couple of studies online, indicate that they’re expecting that to go upwards towards 24% by the end of 2026. So still trending upwards nicely in a global context.
CF: And is that going to be our complete existence eventually sometime in the future, when brick and mortar does not serve us?
GM: I don’t think so. I think people still want the human touch and the companies that are seeing the best value out of ecommerce are adopting a hybrid - or what they call an omni-channel - approach whereby customers have a variety of options at their disposal when choosing how to interact with your brand.
CF: It’s easy to understand product sales via an online platform but how do service sales manifest on an online platform?
GM: Service sales are starting to edge a little bit outside of my scope because Stock2Shop services people that sell physical products. But I think people are still booking service products online; it’s still growing but it’s not something that that I have all that much first-hand experience in.
CF: And your platform does not cater for services that may want an online presence ecommerce presence.
GM: It’s not where it really shines because where Stock2Shop adds a lot of value is that it helps you leverage the data that’s sitting inside your accounting system (or your ERP or wherever you’re managing your product information) such as your pricing and your stock. The way to sell omni-channel effectively is to centralise your data so that if someone comes and buys an item in your store, that reduction in stock is reflected on your website within a few minutes. And likewise, if someone buys an item on your website, that order is synced back into your centralised system relatively quickly so that you’re guarding yourself against overselling. And then similarly, if you want to effect price increases, or if you want to buy in new stock, you just have to do that in one place, ideally on your ERP (which stands for “Enterprise Resource Planning software). Then that data gets synced to all the places that you sell online, and that could include marketplaces such as Takealot and Amazon which, as we all know, is poised to enter the market as well. So if you’re selling in a variety of places, centralising your data is key.
CF: Okay, so right, I didn’t understand much of that. I would have thought that selling on multiple platforms is good for your product, but let’s just home in and understand… and remember please, like I told you, I was brought kicking and screaming into this new kind of future, so be easy on me with the terminology. Tell us what Stock2Shop is and tell us how it compares then to the Takealots and the the Amazons that are out there.
GM: Okay, the simplest way for me to put it is that we help you distribute your data. Your data should be managed in a central database, usually on your accounting system. That could be Sage Pastel, or a SAP system, or maybe SYSPRO or a variety of other well-known accounting systems. We then take that data and sync it from your accounting system to places where your customers might be buying online. And that could include your ecommerce website, Takealot, Amazon… or you might have a B2B wholesale trading platform where your resellers can buy from you at a specified price. So we work together with ecommerce sales channels to help you distribute your data to them so that your online customers can easily see what products are available and what the prices are. And when they place an order, those orders funnel back into your accounting system where they’re created as invoices. So we’re kind of the data guys, sitting between your database of products and places where your products are sold online.
CF: Okay, I got it. Right, so you’re not selling the product, you’re not moving that product, you’re not a logistics business, and you’re not a switch either.
GM: No, we’re not selling the products per se, we are helping our clients leverage the data inside their existing accounting system when selling on a variety of platforms. So if they go and raise their pricing for their products, for example, they don’t have to go and log in to Takealot, update the pricing, then log into their website, update the pricing, then log into Amazon, update the pricing, and so on. They just do it in one place on their accounting system and it syncs to wherever it needs to go.
CF: Okay, that was a bit of a light bulb moment, thank you for that. You got a breakthrough there! Okay, I’m beginning to understand, and hopefully others did too. So let us understand the principles: they are to have your products on as many platforms as possible, and then to simplify the management of your products and the pricing and the availability of your products on those platforms as well. You provide a kind of one-stop solution for that?
CF: Okay, so how do you get paid?
GM: We charge a setup fee that is dependent on which accounting system or ERP you’re using, and thereafter we charge a small monthly fee that’s dependent on the number of items you wish to sync to your various systems. Think of each system you want to integrate as a connector. Each connector has a small monthly fee. So if you are syncing your accounting system to a website, that would be two connectors. If you would then like to sync it to another channel like Takealot, for example, there would be another small fee and so on. So our fees are purely dependent on the number of items you wish to distribute to the various online sales channels.
CF: Just a question, do you assist the entrepreneur or manufacturer or sales house in getting those products to the various platforms that exist as well?
GM: No, we don’t assist directly but we do sit with a prospective client, try to get an idea of what their pain points are and try our best to make sure that any decisions made are the right ones. We want our clients to stay with us for a long time and there’s no point in signing up a client who then soon realises that a workflow doesn’t quite work for them and then subsequently cancels, so our clients' interests are our interests as well. We therefore try and help them make workflow decisions that are good for the long term.
CF: And often entrepreneurs - business people - are not necessarily tech savvy. I mean, I’m finding it hard to just kind of keep up with your mind. Most companies are already running their businesses on the ERP, so with Stock2Shop they can open ecommerce sales channels with very little extra effort. I think it’s that “very little extra effort” that is the unique value proposition that you’re presenting that we need to understand. We don’t understand the effort related to getting products onto these various platforms, so maybe you want to tell us more?
GM: Definitely. One thing I always like to mention up front in all my sales calls is that integration isn’t a magic button. It does require that your data is well looked after and accurate As the old saying goes, “rubbish in, rubbish out”, so most of the effort required is data related. You need to make sure that your codes correlate between your various systems, and that your pricing and stock availability is accurate on your ERP. Once that is in place, we can help you sync that information to where it needs to go. I hope that answers the question.
CF: I think it does, and it is such an important service that you you are providing, and I think it’s good that you are speaking with me because there are a lot of entrepreneurs who are trying to understand the potential that exists within ecommerce. It absolutely imperative that they consider getting your products online, and I get the sense that you are saying that growing companies are likely to get to the stage where they will need a service like Stock2Shop. Is that the stage when they are selling on multiple platforms?
GM: Well even if you have one platform but let’s say you’re doing many many orders, or perhaps your pricing or stock levels are fluctuating quite regularly, then you will benefit greatly from integration. But certainly, syncing to multiple channels is a way in which Stock2Shop really adds a great deal of value.
CF: I’ll give you an example of a question: “Clarence, please ask your guest some of the ecommerce places where I could advertise.” I don’t think that is what you are talking about, and I think maybe this alerts us to the extent that entrepreneurs are still reticent to understand. Is that your experience as well?
GM: Yes, and I would like to make a distinction between advertising your products and presenting them for sale online. A lot of people new to ecommerce make the mistake of thinking that if they build a pretty website, people will stumble across it. You need to market your website to ensure that the right people find it, and that falls outside of our scope but there are many reputable companies that can help you will SEO and other methods to ensure your online store gets noticed.
CF: I think big businesses would understand your value proposition, but perhaps smaller businesses aren’t there?
GM: I think any company that sells physical products and has data that requires regular updating can benefit. And the beauty of Stock2Shop is that we scale our pricing to make it accessible to small momma-and-poppa stores right up to SMEs that are doing many millions in turnover. The gap we saw in the market all those years ago is that integration (and development as a whole) is quite expensive, so we wanted to give companies an alternative to spending hundreds of thousands on building bespoke systems that might not end up working the way they want them to.
CF: Ryan is on the line, and he’s got a question. Ryan, please go ahead.
Ryan (guest): Sure, I run a successful ecommerce company in Cape Town. We’ve got multiple online sales channels, and we’ve found it is complicated to integrate into South African systems. A lot of the time they are built on antiquated infrastructure, so it can be a challenge working with South African companies, so we’ve outsourced to major API guys. Takealot, for example, is difficult to integrate. It is a challenge, so if you guys can crack integration for multiple sales channels with local systems, then that is a win.
CF: Ryan, that is more of a statement than a question, and instinctively Grant understands that. I think we need to wrap up, but Grant, in response to Ryan, clearly we are at a place where the same shoe fits everyone.
GM: Absolutely, and I will try and keep my answer brief. Takealot does have an API that allows us to send very specific data to it. They’ve limited what we can send to Takealot Marketplace to pretty much stock availability and price. You need to manually list your product first, and then Stock2Shop can sync updates from your database sync it to Takealot. When it comes to older software in South Africa like Pastel Partner, they still work really well. We’ve integrated with them many many times. It’s all we do; we don’t build websites, we don’t market websites, we just make sure that the data between your various systems is in sync.
CF: We’re going to have to wrap it there. Ryan, thank you for your question (or your statement). Appreciate your time. Grant McDonald, the Sales and Marketing Manager at Stock2Shop. I can’t believe he said Pastel is old. I thought I was with it!
Get in touch with Stock2Shop to find out how you can future-proof your ecommerce business through ERP integration, making it more efficient, more scalable, and ultimately more profitable.
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