Zando: The Germans are here

Zando has hit the African continent. The ecommerce outfit has been building a presence in South Africa for the last three months. The local stores in the country, like the Naspers-owned Kalahari and the newly relaunched Takealot are about to get some serious competition.

Zando is an online shoe and fashion retail outlet that apes the model pioneered by US-based company Zappos and it’s been making serious waves with a massive advertising campaign in print, online, and radio.

The company is owned by Rocket Internet, which lays claim a global ecommerce empire — GigaOM estimates that it owns some 38 companies across 58 countries. A number of these properties follow the same model as Zando, including Zalando in Germany and the UK, Locondo in Japan, The Iconic in Australia, and Zalora in Singapore

In addition to Zando, the German company owns a couple of other properties in South Africa, including furniture sales property 5rooms and cosmetics trial service Glossybox. It also has a 10% stake in daily deals giant Groupon’s play in the country.

Zando co-founder Eugen Petersen says the company has been well received in South Africa. “Most of the people say ‘finally, I don’t have to shop through the UK for international brands’,” he told Memeburn.

Rocket Internet SA’s CTO Nils Körber meanwhile said he was “almost surprised at how good the reception has been”. He added that while the company is happy with the reception, it “still wants to grow bigger”.

Neither were willing to divulge any numbers, making it difficult to meaningfully gauge how successful Zando’s entry into the market has really been.

CEO of research company World Wide Worx Arthur Goldstuck reckons the country has been ready for something like Zando for some time:

The South African market has been ready for a Zando-type concept for a long time, largely because of the gap left in that market by the major clothing chains. In the online retail sector, the likes of Edcon, Stuttafords and Truworths have been missing in action. It’s obvious they are considering their options, but when the market is starting to catch fire, you can’t still be fussing about where you’re going to position the fire extinguishers.

Goldstuck reckons that one of the key things setting Zando apart at the moment is the fact that it offers free delivery as well as returns, but that this could come back to bite it in the future. This policy, he says “could end up eating away at their margins, so the question is whether it is sustainable”. He does, however note that it doesn’t have the cost of physical stores to worry about.

One other potential weakness, Goldstuck notes, is the degree to which Zando copies Zappos: “the strong emphasis on footwear could well be a weakness. It works for Zappos because of the powerful apparel mail order culture in the United States. We are still waiting for someone to create that culture in South Africa”.

Takealot‘s Kim Reid also thinks going niche so quickly is going to be a challenge. “I think they’ve got a tough time ahead of them,” he said, “to niche as quickly as they have into shoes and a bit of fashion is always going to be difficult”.

He says that parent company Rocket Internet meanwhile is “very brave” for entering into the areas it has, but dismisses criticisms of the clone model. “Every ecommerce model is a copy of every other ecommerce model,” he said.

However niche Zando may be, Petersen reckons it will definitely face competition in the coming months but that “they’ll either be too small or too big and too slow to change”, effectively dismissing potential challenges from startups and established players like Naspers alike. “It’ll be interesting to have competition, we’re not afraid,” he added.

Körber says Rocket Internet “definitely plans to launch more ventures in South Africa”. He was unable to divulge exact details of these ventures, but said that they would be in different areas of ecommerce to Zando.

The company also has its sights set firmly set on expanding into Africa. According to Körber, the company decided to enter the country because, “South Africa is the right place to get an understanding of the rest of Africa”. We can also confirm that Rocket Internet plans to launch its next African venture soon. At the moment though, precise details are under tight wraps.

Petersen reckons that now is the right time to head into Africa. “The winds of change are blowing through Africa,” he told Memeburn, adding that “you just have to get the timing right”.