In this interview, internet expert Andy Higgins makes an interesting point. He says, “If you look at other countries, you would see that at some point there’d be some talk about the hockey stick growth, the tipping point, or the knee of the curve. In my experience, that never happened in South Africa.” In other words, South Africa never experienced the exponential, explosive growth in e-commerce and the internet economy that many other nations did. This is, I think, a sad thing, and a searing indictment of the domestic ICT industry and the regulatory regime that have kept South Africans from easily accessing cheap, reliable broadband to this day. There’s always a lot of talk about the potential for emerging markets to “leapfrog” to wealth, skipping older technologies and building a modern economy by embracing new technologies. That has never happened in South Africa, and it’s because the industry is monopolistic, inefficient, and poorly regulated. It’s a national shame. – FD
ALEC HOGG: Welcome back to Power Lunch. The annual South African E-commerce Awards recognises and rewards South African websites that make use of the Internet as a platform for e-commerce. Andy Higgins is the MD of uAfrica.com. He’s with us in the studio. I’ll just tell you a little bit of background here. Andy is one of the Internet pioneers in South Africa. I think back to the mid-nineties, when you were starting off as bidorbuy, nobody believed this ‘Interweb’ thing was ever going to take off.
ANDY HIGGINS: Yes, it was a very interesting time. I guess it was back in the dot com boom when we launched, we’d raised a whole lot of money and launched in 12 countries around the world. We were going to conquer the world. That didn’t quite work out like that, but we persevered and I think in the end, we proved that e-commerce is here to stay.
ALEC HOGG: Did you do any stats looking back at those days in 97/98 on how many Internet companies there were and how many, in fact, have survived?
ANDY HIGGINS: Well, if I just think back to our sector, which of course, was on the market place or when we started, on an auction – a sort of equivalent of a local eBay – I remember there being ten major competitors at the time. There was The Lot and MWEB Auctions…there were many different ones and bidorbuy was the only one that actually survived out of that bunch.
ALEC HOGG: You’re not running bidorbuy anymore.
ANDY HIGGINS: No, not anymore. I’m still involved with the business, but I’ve moved on. I enjoy the start-ups. I started a new business – also in the e-commerce space – helping small to medium businesses, but I’m still on the board and still a shareholder in bidorbuy.
ALEC HOGG: Hasn’t that always been the problem though, with e-commerce in South Africa? It’s just too damned expensive to do the transactions for small to medium companies.
ANDY HIGGINS: Sure, if you look at the investment that was required for us to establish a business like bidorbuy, it was significant – certainly, millions of Rands. Now, with the advent of Cloud computing, that’s changed now. For as little as even R150.00 per month, a business can be set up using Cloud-based technology, have really good technology, and be up and running in a very short amount of time.
ALEC HOGG: R150.00 per month.
ANDY HIGGINS: Yes.
ALEC HOGG: Is that what you’re doing now – helping companies?
ANDY HIGGINS: Exactly.
ALEC HOGG: And the survey that you’ve done on e-commerce, does it surprise you – the way it’s growing – or were you one of those early prophets who felt that it was always going to get there?
ANDY HIGGINS: Alec, we are always waiting. If you look at other countries, you would see that at some point there’d be some talk about the hockey stick growth, the tipping point, or the knee of the curve. In my experience, that never happened in South Africa. I was always hoping that it would happen. I think I got to the point, after a decade in the industry, of realising that maybe that doesn’t happen. We’re at the point where e-commerce is still growing at 25 to 30 percent per year, and it’s now off a decent base. Even on R4bn for example, you have to grow at 25 percent. That adds an additional R1bn in a year and that’s significant, especially when you compare it to traditional retail. I’ve adjusted my expectations. I think that it’s still small, but it can be significant business even if we just keep growing at that linear rate.
ALEC HOGG: And our SME’s taking more interest… Clearly, that’s the area you’re targeting.
ANDY HIGGINS: Sure. I always felt that there was a bit of a gap there in South Africa, so we’ve actually partnered with an international company (Shopify), which is a Canadian-based Cloud e-commerce company. We’ve taken their software and adapted it for the local market, specifically around payments, logistics, and marketing. In just over a year, we’re now approaching one thousand SME’s that are paying customers on our platform.
ALEC HOGG: How are their turnovers going?
ANDY HIGGINS: It’s still small, but a big focus for us as well, is to focus on what we call multi-channels. We believe the future of retail is not to sell on just one sales channel. You’ll sell. You need your own branded storefront on your domain, but you also sell through online marketplaces such as bidorbuy or eBay. You also sell retail – physical retail – and we believe a big trend for the future of e-commerce is the intersection of online and offline. Personally, I think it’s an area where technology hasn’t disrupted yet and I think that in the next three to five years, you’re going to see disruption where technology is a means to sell across these multiple channels and that’s intersecting both online and offline.
ALEC HOGG: So how would you be feeling if you were an investor in a big offline retail business?
ANDY HIGGINS: I think there’s definitely opportunity there. They obviously need to act. If you look internationally, there are acting. As I’ve said, I don’t think you can look at online and offline in isolation anymore. There’s this intersection of the two. Many people will research for a product online and buy it offline, or they may even go research it offline. They’ll go into a store, play with it, and then look for the best price and buy it online. They need to embrace what we call ‘the army channel sales experience’ and focus on the customer. Big, offline retailers actually have a big opportunity, but they need to embrace that and not try to see online as a competitor to them. They need to see it as a more unified, holistic solution that they need to deliver.
ALEC HOGG: Interesting stuff, Andy. Just to get more specific, Takealot.com: we had the CEO on the program a little while ago. It’s almost as though there’s a little group of people who used to work for Naspers who’ve gone off and started their own venture – fighting against Kalahari.com, which is part of Naspers. What’s that battle and how’s that shaping up?
ANDY HIGGINS: Well, I think it’s fascinating – very interesting. We always debate whether their – Amazon is a big success story internationally – is it going to be that there’s maybe going to be only one winner? Could there be one winner out of this? Does it have to be one winner? Personally, I think that within that space, there’s space for both. I think that you’re going to see both companies being successful, in my opinion. I’m personally backing Takealot as one of the shareholders.
ALEC HOGG: How did you get into that?
ANDY HIGGINS: Well, the main shareholder in Takealot is a New York hedge fund (Time Global) and in fact, bidorbuy was the first African investment they made. We invested with them in a number of businesses and I was fortunate enough to get the opportunity to invest earlier on in Takealot, as well.
ALEC HOGG: That’s interesting; so Julian Robertson’s reach is very deep in this country.
ANDY HIGGINS: It is and it’s actually now extending out into Africa through some of the other investors. One Africa Media, which is in a vertical classified space, is also a very interesting and competitive space with property, cars, travel, and the job market as well, but that’s into East and West Africa so we’re seeing a lot of opportunities up north as well.
ALEC HOGG: You must have done really well at bidorbuy for this Tiger Fund to put $100m behind Takealot. They must know this market well and say ‘well, we’ve had success with Andy, so the next one will be just as big’.
ANDY HIGGINS: That’s a very flattering thing to say. I’m sure they’ve done their own investigation in running their business. I think that’s whom Tiger has put their money behind and believe they can succeed as well. We’re up against Rocket Internet, which is very heavily funded, in partnership with MTN, and up against Naspers on the African continent as well, so they are very formidable competitors. It’s a very fascinating space. I certainly can’t think of anywhere else in the world where I would want to be operating, other than in Africa at the moment. I just came back from Nigeria a few weeks ago and it’s the same thing. You have two big players – heavily invested – over $60m invested each, in Jumia and Congo in Nigeria – so similar battles heating up north of our borders, as well.
ALEC HOGG: So the e-commerce war has arrived in Africa, lots of bets being placed.
ANDY HIGGINS: Yes. Those are the big players. As I mentioned with uAfrica, we also believe that there’s this big space for the smaller operators in the SME space, and that’s whom we’re trying to empower. We’re talking about your small boutique-type store, maybe selling dresses that’s not your typical commodity item – so it would be very difficult to compete against Kalahari or Takealot on selling books or DVD’s. However, if you have a niche product or unique product that’s not as much of a commodity…those are the people we want to empower and whom we believe can also be successful in the e-commerce space.
ALEC HOGG: Good stuff, Andy.
ANDY HIGGINS: Thank you.
ALEC HOGG: I’m sure you will be successful – again. That was Internet pioneer and entrepreneur Andy Higgins, the man who got bidorbuy off the ground. He’s now the Managing Director of uAfrica.com.
