by Herman Manson (@marklives) Efinity is a new South African ecommerce fulfilment service, built by Media24 ecommerce on the back of experience gained through its consumer-ecommerce plays, Spree.co.za and ShopGuru.
According to Nic Robertson, head of new business development at Media24 ecommerce, the offering is similar to Amazon’s ecommerce fulfilment solution, but obviously geared towards SA retailers.
The product is focused on cost-effective and efficient fulfilment through a partnership with sister company, On The Dot, the Media24-owned logistics-services provider which provides warehousing space, and handles dispatches and returns through various courier partners.
Pay as you use
Efinity has a pay-as-you-use model, says Robertson, allowing entrepreneurs to try their hand at ecommerce. Stock can be scaled up and down.
The Efinity model addresses various bottlenecks in ecommerce fulfilment, including ensuring that technology is properly engineered; trusted payment methods are on offer (and offering payment not just through credit cards, but also through chipped debit cards); and, finally, logistics and fulfilment. Efinity also offers reverse logistics (returns). Inventory can be tracked, as can deliveries.
Efinity came about through experience built up with fashion site Spree.co.za. Initially, outside products were looked at but these were either too expensive or performed only some of the tasks that were expected. Media24 ecommerce decided to build a platform and then to enter the business-to-business (B2B) space.
Scope for expansion
While it is happy with the trajectory of both Spree and ShopGuru, the company is loathe to enter into niches already serviced by another Naspers-owned ecommerce play — kalahari.com (which recently announced it would merge with takealot.com, subject to Competition Commission approval). It limits its scope for expansion in the business-to-consumer (B2C) space.
Robertson says it’s also in the best interests of Media24 to open up the ecommerce market — the more people get used to online shopping, the bigger the local ecommerce pie will grow. With Efinity, the company hopes to help grow both the markets and its slice of the pie.
Cost bases
There are three cost bases with Efinity:
- There is the inbound cost — where it charges for receiving the product, doing a quality check, checking that the product is in line with the invoice, tagging it with a barcode and inserting it into the Efinity system. At this point, the product will display in your EC store. The cost is not fixed and depends upon the client and product.
- Then there is a storage cost, charged pro-rata — the quicker your stock moves, the more cost-efficient this gets.
- Finally, there is an outbound cost — for the product being packed and shipped. It’s charged on delivery. The system breaks down the cost and clients are able to factor it into their margins.
Efinity will have access to a new warehouse facility in Johannesburg soon, says Robertson, which should have a positive impact on costs; at the moment, it only ships from Cape Town. Clients will be able to split stock between Cape Town and Joburg.
A fraction of the size
Ecommerce is still only a fraction of the size it could and should be, says Robertson, who estimates the value of the SA ecommerce environment was around US$500m in 2013. But growth is standing at around 40% year-on-year and Robertson expects the market to grow to US$1bn in pure ecommerce sales within the next three years.
The expanding reach of Wi-Fi is growing SA’s online customer base, as is leaps in payment systems and education in online commerce by well-known brands such as Woolworths, Mr Price and Edgars.
According to Robertson, the role of mobile in ecommerce growth cannot be underestimated; as much as 70-80% of a sites traffic can come via mobile devices.
Consumer expectations
Managing consumer expectations are a major factor in all ecommerce plays, says Robertson, who urges retailers to focus on building user-friendly sites that offer a number of payment methods and don’t promise delivery times which are unlikely to be achieved.
Robertson says Efinity will work with clients ranging for bloggers to established business — no business is too small or too big.
The company is already exploring partnerships with other Naspers companies to grow the ecommerce system further, hints Robertson, who adds that Efinity is also in advanced talks with a number of clients.
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