An example, a parcel of 22,000 pairs of designer jeans were originally ordered by a well-known US clothing retailer. Unable to take effect delivery or to find buyers in Europe and the US, the parcel was then sold through South African townships by local traders at R50 a unit.
This reflects the growing middleclass in Africa, which is open to discounted goods. According to the African Development Bank, the new middleclass in Africa has risen to 34% up from 27% in 2000, which has increased demand. Another key factor is that historically brands have mattered less than price throughout Africa, as it has not been bombarded with advertising, but now all this is changing and quickly, thanks to television, mobile phones and general globalisation.
The surplus product that is coming into Africa is often ageing stocks and outdated models and designs that have little demand in developed economies despite their low cost. However, in many African cities, well-known brands at low prices, even if they are older designs and models, still have extensive consumer uptake.
Here in South Africa, spaza shops make up 30% of the national retail market and much of this internationally liquidated stock is now finding its way to consumers via such outlets. Paul Greenberg, chairman of recently launched online clearance marketplace Going.co.za, says, "Consumers are as cautious as ever about spending but are also becoming more brand aware as globalisation takes hold. The challenge for businesses in rural areas is obtaining stock that is in demand without paying high prices. The company has been successful in securing liquidation stock from Europe and the US and bringing it into South Africa. It has found is that the local resellers are very quickly buying up this stock at low prices to resell to local communities at a bargain."
According to Greenberg, the stock liquidation industry in Europe and the US is significant and now much of this inventory is finding its way into Southern African markets. The company sources surplus stocks in Europe, China, India and the US.
The trade of surplus and liquidation consumer goods in South Africa has always been an informal and fragmented business. Sellers typically utilise internal discounting methods, retail outlets or auctioneers to sell directly to consumers or to a limited pool of professional buyers. These current remedies result in redundant handling of stock, high transportation & operational costs, loss of channel and brand control and lost recovery value.
The company is part of a growing trend of e-commerce businesses that are using technology to create transparent marketplaces that businesses can use to sell assets. For more information, go to www.going.co.za
