🍨 SA's Mall of the Future…

Hi there,

Room to smize? People got pretty panicky when a bunch of tourists overturned their gondola in Venice, reportedly from being a bit overzealous with the selfies.

We can’t fault them though, having recently capsized a vessel ourselves. And that without even taking selfies — more at the end of today’s newsletter.

In this Open Letter:

• Big moves: The race to rule online retail in 2024.

• Web3 funding, return of the sharks & hating on ISPs.

• Big insights: How to raise R97M for your FinTech.

• Where we save & invest: The results are in.

• Tell someone: Share this & get free business tools.

TRENDING NOW

The Race to Rule SA’s Online Retail in 2024

There will be innovation…

In the olden days, mall owners made big bucks. 

Tenants didn’t have many options, nor did they care much as customers didn’t have that many shopping options, either. Everyone was making money. 

However, the higher up the food chain you were, the proportionately more money you made with less effort – so that's where you wanted to be. But now with malls shooting up everywhere and pressure on retail, being the mall owner no longer guarantees to make money – many are under pressure with quite a few malls up for sale.

But there’s a new race for a new kind of mall that will fully kick into gear in 2024. 

And that is to become SA’s biggest online mall. A multi-tenanted online marketplace featuring potentially limitless third-party storefronts that’ll deliver your heart’s desire straight to your door.

But we’ve had e-commerce stores

Yes, and the likes of Takealot have been running for years. However, e-commerce stores have a massive challenge in keeping down customer acquisition costs – buying ads to get me to buy from them quickly eats most of the margin. 

What’s more, sourcing niche products with higher margins creates warehousing and nuance customer service challenges. So, taking a book from brick-and-mortar malls and offering a storefront for third parties is quintessentially moving up the food chain — the online kind. By doing this they stand to benefit among other things:

• No cost in sourcing products.

• Lower storage and warehousing costs.

• Little-to-no cost in CAC (sellers market their own products).

• Offset risk of overstocking to third parties.

• Offset customer service and returns to third parties.

• All while making a sweet margin on every sale.

Amazon’s quite good at it

60% of Amazon in the US’s e-commerce sales are for third-party products – their marketplace is pumping. 

What’s more, the ad revenue generated from this (third parties can place ads on Amazon’s website), is what is pushing Amazon e-commerce into the green. Effectively using their eyeballs to capture ad revenue whilst also making a margin on the sale – ah, the good ‘ol double dip, something you just can’t do if you sell your own products. 

What’s more, their 9.7 million sellers brought in around $117.72 billion in third-party seller services in 2022 – and many of them did so quickly, with 63% reportedly being profitable in the first year.

So, what is coming to SA?

By now you probably know that Takealot has a marketplace where it sells third-party products – they currently have more than 10’500 sellers on their platform. 

But with Amazon coming to SA in 2024, they are also gearing up to make their marketplace a big focus, offering an exclusive R1 for the first year fee for sellers (Takealot normally charges R400 per month, which at 10 500 brings in a cool R4m+ a month). 

But it's not only a battle between these two e-commerce giants. Bobshop (formerly BidorBuy) is an online marketplace and internet auction platform, focusing exclusively on its marketplace – meaning they don’t sell their own products at all – and thus don’t compete with suppliers. 

What’s more, SA’s oldest classifieds site, Gumtree, is also rumoured to be pivoting away from in-person meetups and switching to a marketplace and arbitrage role. Bad news for scammers everywhere.

Even wholesale giant Makro is getting in on the action with Makro Marketplace where third-party sellers can list and sell new products on Makro’s normal site (if it’s not already available in-store).

The opportunity

The big thing is, as these platforms start enabling e-commerce for every product and supplier you can imagine, the suppliers will need tech to manage their one-man shows or small operations. 

Planning, stock, logistics, finance, etc. What’s more, these people might need some help with digital marketing, websites and other activities.

So whether you are a seller or supplier to sellers, 2024 is lining up to be a massive year for SA online marketplaces. And we feel that just like the early days of the physical mall, there will be money made across the board… don’t miss out.

OVER TO YOU

IN SHORT

🚙 Unbundling. WeBuyCars’ parent company Transaction Capital is considering unbundling it from the group and listing it as its own entity on the JSE. With a 14% decline in earnings in 2023, WeBuyCars has seen growth in the 2nd part of the year with increased volumes and added bays to its national footprint.

🪙 Web3 Africa. Fuse Network has announced a $10 million grant aimed at funding Web3 projects in emerging markets like Africa. And while sub-Saharan Africa has the smallest crypto economy, countries like Kenya, Nigeria, South Africa and Tanzania show some of the highest grassroots Crypto Adoption.

🤮 Sick & Tired. South Africans have had it up to their necks with their ISPs. A new report from DataEQ which tracks how consumers feel about their ISPs based on 140’000 public posts on social media shows that local ISPs have a -42% average net sentiment. It’s lower than banking (23.5%), insurance (9%), and even telecoms (-14%).

🦈 Hi Haai. Great White Sharks could be returning to Cape Town’s False Bay. In 2011 there were over 300 sightings by SharkSpotters. In 2020 that number dropped to zero – staying there for 3 years. In the last few weeks, six different sightings have been recorded. Be safe out there.

🤖 Google AI. In the last year, OpenAI (and specifically ChatGPT) has been pretty much all the AI conversation has revolved around. Google hopes that this will all change with its release of Gemini – “the largest and most capable AI model” with Gemini Ultra the first to be available in an early access program.

🔇 Spotify Wrapped. Despite posting a R650 million+ quarterly operating profit in October on the back of a 26% active user increase in Q3, Spotify announced this week it would be reducing its employee count by around 17% and someone wrapped it for shareholders, LOL.

🏉 Scoring Money. VC firm HAVAÍC is kicking nearly R19 million into African-born tech company Sportable’s Series A round (R283 million). Sportable uses micro-tracking tech in sports like rugby, soccer and American football to improve data collection and analysis.

30-MINUTE PODCAST

How to Raise R97M for Your FinTech

If you’re passionate about the potential for high-growth ventures in Africa, this week’s podcast is for you. We spoke to Nicole Dun, COO and co-founder of Startup Club’s 2023 FinTech of the Year, Revio. Nicole was part of the team that raised their $5.2 million seed round in September, and she was super happy to tell us all about it…

Some highlights

1. A day in the life of the COO of a scaling FinTech

Despite the title, Nicole says she leans into her strengths, which are more on the commercial side of the business – enterprise sales, fundraising, brand and marketing etc. But then there are those stark context shifts when someone comes in and asks a much more practical focused question, like “How’re we gonna manage leave?”, etc.

Finding the balance between the strategic and operational side has been more about managing her own energy levels throughout the day.

2. Landing the $5.2M Funding for Revio

Nicole’s approach was to build relationships with potential funders long before it was time to ask for money. Making contact and giving monthly updates on their progress meant that, when it was time to raise, the investors already had so much insight into the company, they wanted to get on board.

Even now, after they’d raised, those relationships are important to keep going.

3. What are they going to do with the money?

Firstly, Nicole says, they’re deepening product capability based on feedback from their first 10 or so corporate clients. Next, they’ll be building the team, developing a repeatable sales process and investing in marketing, as well as ensuring they stay ahead of the curve in terms of payment tech.

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

We asked how you save, and would you believe savings and RAs are in the lead…?

🟨🟨⬜️⬜️⬜️⬜️ 🏊 BTC (one swimming pool at a time) (10%)

🟨🟨🟨🟨⬜️⬜️ 👵🏻 Retirement Annuity (18%)

🟨🟨⬜️⬜️⬜️⬜️ 💸 Money Market (10%)

🟨🟨🟨⬜️⬜️⬜️ 📈 Shares via EasyQuities (14%)

🟨⬜️⬜️⬜️⬜️⬜️ 🙌 Stokvel, baby (6%)

🟩🟩🟩🟩🟩🟩 💰 Good ‘ol Savings Account (27%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🛋️ I hide it in my couch (like a president) (5%)

🟨🟨⬜️⬜️⬜️⬜️ 🤔 What is this “save” you speak of? (10%)

Your 2 cents…

Lekker. Sounds like you got this one waxed, Nikolaas.

WE FLIPPED IT

It’s flipping easy to tip a kayak — at least that’s what it felt like. We are proud to say we were the first “tourists” in Cape Town to flip a kayak this season. Hope yall having a great Dezemba, stay safe!

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