South African ecommerce won’t be a big force: here’s why

At each of the ecommerce conferences he’s attended over the last two decades the same lie was spread: ecommerce is booming. Massmart’s ecommerce executive Colin Fleming says that’s simply not true.

“It has taken off across the world, not here [in South Africa]. As a sales channel — for many structural reasons — it is not going to be a big force in South Africa.”

Having said that, Fleming certainly doesn’t believe there’s no value in the ecommerce space, considering he’s spent over 20 years trying to figure it out. Back in 1997 Fleming was responsible for the very first online store in the country, a brave and “in hindsight stupid” attempt at understanding ecommerce. Thanks to the tech bubble, the wave of success and fortune never came for Fleming and he was left empty-handed like a surfer without surf.

Today Fleming is part of the massive ecommerce operation behind Massmart, parent company of retailers Makro, Dion Wired and Game. In a presentation at this week’s Ecommerce Africa Confex held in Cape Town, some attendees were hoping he might divulge more on Massmart’s plans for conquering the ecommerce space. Instead Fleming shared something more valuable: offering a first-hand look inside the engine that is Wal-Mart.

Responsible for getting some of the South Africa’s largest retailers online, much is expected of Massmart following its takeover by Wal-Mart. As the world’s largest retailer, Wal-Mart’s acquisition of Massmart was a blimp on the company’s financial statements filed under ‘non-material acquisitions’. As insignificant as the takeover might seem for Wal-Mart, it became an important moment in South Africa’s corporate history and carries the massive potential for world-class skills to be transferred to Massmart employees.

For Fleming this includes an inside look into Wal-Mart’s ecommerce strategy, one that has been surprisingly unsuccessful until recently. Since a new CEO took the helm in 2013, Wal-Mart has aggressively tried to play catch-up with other US retailers who have had far greater success online. Investing heavily in digital, Wal-Mart redesigned its web store last year when a Halloween mishap over “Fat Girl Costumes” caused quite the tweetstorm.

But behind the scenes Wal-Mart invested in building a stand-alone company responsible for its digital future following its acquisition of a startup called Kosmix. Located far from the company’s HQ in Arkansas, the Silicon Valley-based @WalmartLabs has no operational relationship with its physical stores. One of their tweets perhaps explains this best: “We’re not a retailer competing in Silicon Valley. We’re building an internet technology company inside the world’s largest retailer.”

Witnessing first-hand how @WalmartLabs operate, Fleming believes more legacy retailers should follow a similar approach. “The natural tendency [is] to innovate and build on what we have,” Fleming says of retailers heading online. Since such an approach adds unnecessary costs it should rather be done independently. “People simply haven’t figured out what the new business proposition is.”

At Memeburn we hope what all this boils down to is consideration for a similar @MassmartLabs situated in Cape Town, miles from its Sandton HQ. Regardless of the company’s ecommerce plans, Fleming is certainly a great force behind Massmart who’s making the waves he never got to surf.