On Thursday, 13 October 2016, Beyond Retail 2016 took place at The Bay Hotel rotunda in Camps Bay, hosted by UCS Solutions and Business Connexion. The third speaker of the day was Ryan Bacher, CEO of Netflorist, with Jessica Knight, CEO of UCS Solutions calling this business case study: “Proof that relentless passion and curiosity can take you far.” Bacher then gave their back story, explaining that they started just a month after Kalahari kicked off (which merged with Takealot in 2015, leaving Netflorist as the oldest) and purely as an experiment.
See, Bacher was still working at internet service provider NetActive at the time and ran Netflorist as “an also business” with partners Lawrence Brick and Jonathan Hackner for the first year or so, as a Nineties version of the lean startup model that has since flourished everywhere. They simply started the site to prove they could get brands online. “Nobody knew anything about e-commerce in SA in 1999,” says Bacher, adding that they chose to sell flowers for no other reason than it was January at the time, and Valentine’s Day was around the corner.
So they built a website and sent an email on to NetActive’s 40,000-odd subscribers. This resulted in a few laughs from the audience, as Bacher pointed out this would nowadays be seen as unsolicited business communication or spam, but back then there was nothing more exciting than receiving an email.
Then the orders started rolling in – without any flowers to deliver. So they contacted a florist based in Sandton and sent on the order details for them to deliver. As obvious as it may seem, online e-commerce involves physically delivering and housing what you’re selling digitally. Bacher says this was a real Aha moment for the team, as they realised they were no longer “just internet guys”, now they were retailers. He says retailers in 2016 are struggling with this in reverse, as you have to do your marketing online to attract real-life footfall.
Building on the fact that e-commerce was unchartered waters at the time, Bacher said: “If you want a search box, you must have a database to link the results to” – they wanted the search box but didn’t have the database. To get around this, they simply hyperlinked the ‘go’ search button to their overall product page, so you’d see their full dozen floral arrangement offerings no matter what you were actually searching for. That’s the first hack.
The second business hack Bacher shared is just as clever: There were no secure electronic credit card payment systems online yet, crucial for processing online orders. As ubiquitous as it now seems today, this was long before the MasterPass online checkout payment solution was even a twinkle on the digital horizon. To get around this, they made the last page of the Netflorist website a ‘credit card details’ form, with an egg timer icon that showed for eight seconds then thanked consumers for the transaction. These details were then saved and manually punched into a credit card machine later. Impressively, Netflorist had R30,000 in sales for Valentine’s Day – the same turnover as sales from physical florists, and all based on a website that was built in a week to prove it could be done. Business boomed from there, with further lessons learned along the way. Key among them? South Africans are happy to buy online. But what do we really know about them?
Without data, you are just another person with an opinion
— George Shiber (@GeorgeShiber) October 14, 2016
In God we trust; all others must bring data
W. Edwards #Deming, born #OnThisDay pic.twitter.com/Hsindi3DkJ
To illustrate this Bacher shared that they’ve started up a physical bakery in some of their warehouses, creating delectable cupcakes in a jar. As this was a price setter in SA with no predecessor to compare to, Bacher faced the challenge with Google Analytics, setting it at three original prices R100 apart and seeing what percentage would buy at which price. Bacher says they do this for all non-commodity products on site – which is basically “everything but red roses”. It’s an accurate way of assuring yourself customers are interested in the product and that you’re neither over- nor under-charging for it.
Bacher then spoke of the differences between SA and Silicon Valley. Admitting it’s perhaps an unfair comparison, he said SA is still all about the hardware while in Silicon Valley there’s been a shift towards software. He explains: “No one there cares about e-commerce, it’s rather servicing e-commerce.” There’s also a difference between business goals (SA) and purpose (Silicon Valley), as well as focus on instant profit here as opposed to growth there and getting the product or service to as many people as soon as possible. Lastly, he spoke of just how fast technology is changing our world. Think about the way the evolution of the mobile phone makes physical products dematerialise – when last did you use a physical camera, torch or calculator as opposed to the feature on your phone?
In closing, Bacher pointed out that e-commerce makes up just 1% of overall retail in South Africa but the number itself is irrelevant as it’s up to 70% when you look at flower sales. When it comes to industry disruptors, note that almost 30% of all music bought in SA is online, with Uber attracting 70% of all upper LSM taxi transactions. “It’s nothing to do with the size of the business, it’s about the category you’re in.”
Click here to read the 1999 press release about Netflorist’s launch, click here for more on ‘The power of flowers’ with NetFlorist’s ‘happy cam’, and look out for further coverage of the #BeyondRetail2016 sessions over the next week on just how the local retail market is boosting the SA economy.
