SOUTH AFRICA – In line with its strategy to invest in and accelerate its e-commerce presence, South African retailer Massmart has entered into negotiations to acquire a controlling stake in OneCart, privately owned on-demand grocery retail marketplace and logistics platform.
The move is aimed to beef up its e-commerce capabilities, a key focus that the retailer has been investing heavily in online shopping.
This follows its recent confirmation that it has entered in a deal to sell its Cambridge Food and Rhino Cash & Carry chains, together with parts of the Masscash business and Fruitspot, to JSE-listed Shoprite Group for around R1.36 billion (US$91m).
It is part of the group’s much-vaunted turnaround strategy under new CEO Slape, who was parachuted into the position about two years ago by Massmart’s majority owner, US-based retail giant Walmart, reports MoneyWeb.
“The proposed acquisition is consistent with Massmart’s strategy to invest in and accelerate e-commerce growth, particularly in the fast growing on-demand delivery segment.
“Negotiations are at an advanced stage and the group hopes to conclude discussions in the coming weeks,” said Massmart group CEO Mitch Slape.
According to the retailer, its key objective going forward would be to invest in aggressively growing and fully supporting OneCart’s existing independent retailer marketplace model that enables consumers to order from multiple retailers via a single platform.
OneCart has partnered with numerous retailers, including Pick n Pay, Makro, DisChem, Clicks and Woolworths among others, and allows customers to shop across multiple stores through the site, and have the goods delivered in one batch.
Officially launched to the public in 2018, the startup has since expanded its service from Gauteng to major urban hubs across the country.
Massmart stipulates strategy on building e-commerce capabilities
Massmart had underinvested in online shopping and faced competition from other players but it is trying to catch up with a plan to use its wide network of stores as delivery sites.
Its turnaround strategy includes a much more concerted drive into e-commerce, to compete with the likes of Shoprite’s highly successful Checkers Sixty60 on-demand delivery service and Pick n Pay’s Bottles service, now dubbed Pick n Pay ASAP!
In March this year the company outlined the group’s immediate e-commerce priorities including establishing a unified group-wide e-commerce capability under the leadership of Sylvester John who has been seconded by Walmart to fulfil the role of Massmart group e-commerce Vice President.
John was instrumental in leading online delivery from more than 3,000 stores in the US to consumers.
Massmart is also revamping its logistics capabilities under the makro.co.za, game.co.za and builders.co.za online user interfaces, including key functionalities like search, to provide a more seamless and intuitive customer experience.
Also, the company is developing a new transactional and value-adding mobile first digital solutions that cater to different customer occasions, journeys and segments, including participation as anchor retail tenant on the Vodapay Super App.
Further they are strengthening and expanding its order fulfilment capabilities such as on-demand and same-day order fulfillment, ‘ship to home’ capability from distribution centres to supplement store fulfilment capacity and improving the click-and-collect customer experience in stores.
Commenting on Massmart’s e-commerce ambitions John said, “It’s clear that we have the brand recognition, geographical presence, merchandise assortment, procurement scale and primary logistics capability to be an even more successful e-commerce player.
“In addition to better leveraging these assets, our immediate opportunity is to improve and expand our digital sales platforms and last-mile delivery capability. The successful acquisition of OneCart will go a long way toward achieving this.”
All major retailers, have reported major spikes in online sales, which has been boosted by the Covid-19 pandemic.
The pandemic has seen more people stay home or work from home since the outbreak at the beginning of last year.
There has been an exponential rise in e-commerce since the Covid-19 pandemic struck about 17 months ago, forcing retailers to be agile in boosting sales amid the decline in foot traffic at physical stores and forcing reticent consumers to adapt to online shopping.
According to Massmart, online sales across the group in 2020 increased by 58.6%, while the number of unique e-commerce customers grew by 73% and click-and-collect orders increased by 69.5%.
Its e-commerce unit contributed 1.8% of total sales, representing a significant increase over the prior year.