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Marriage made in online heaven

Aug 08 2014 13:12

Cape Town – If you have a product that you would like to sell online, there is no better expert in South Africa than Yuppiechef co-founder Andrew Smith to give you advice. The League of Beers founder Rob Heyns was lucky enough to get it when he most needed it. The results would speak for themselves.

Smith has a simple checklist for choosing online products that will work:

- Is it a known brand? If people already know about the brand, or understand it, the ability to touch and feel it isn’t so important.
- Is it cost effective to ship?
- Can you build a community around it? In other words, will people talk about the product and share their experiences?

Smith should know. Yuppiechef has won over 20 awards for its e-commerce site, including most recently Best E-commerce Store and Best Shopping Process in the 2013 South African E-Commerce Awards.

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Once you’ve found the perfect product, logistics and systems become the biggest challenge to an e-commerce business’s success, as Heyns found out when he launched The League of Beers in 2011.

Hidden challenges

Before launching League of Beers, Heyns was involved in the wine and cheese industry, but he wanted to start his own company.

“I’d always loved beer, and I’d noticed that there was a slow food revolution taking place in South Africa,” he said. “People were looking for interesting food and beer to try out, and there was a definite trend towards craft beers – but no one knew where to find them.”

His answer was an online site.

The idea ticked two of Smith’s boxes, but shipping the product would prove to be a challenge.

“Because of my contacts in the liquor industry, it was relatively easy to create good working relationships with the micro-breweries, and to secure a deal with a liquor store that would let me stock my product there. They already had a liquor license, which allowed me to start immediately.”

Everything seemed great, and then the problems began. The third box, “was it cost-effective to ship?” proved to be a real challenge. Craft beer is popular, but suppliers are small and often unprofessional. They don’t have regular stock, and the goods are hard to move.

“I started needing more space than I had to keep enough stock on hand to ensure stock flow, and finding good, cost-effective couriers was almost impossible. These were big, heavy and breakable items, and if I chose a low cost carrier the goods didn’t arrive, and a high cost carrier priced me out of the market.”

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Finding solutions

Heyns turned to his mentor, Smith, for advice, and the discussions that followed led to a new and exciting opportunity – what if Yuppiechef and League of Beers partnered up?

“Rob was keeping me up-to-date on the challenges he was facing, and asking my advice, and the synergies between our brands just clicked,” said Smith.

“Rob had built up great relationships with the breweries and he knew beer, and we were branching into deli foods. He already had the contacts, the products and he was building a brand, and we had a huge warehouse, and the experience and systems in place for scaling, reach and logistics.”

Over and above the elements needed to launch an online store is the simple lesson that as a start-up, it’s often more cost-effective to find a more established business with whom you share synergies to form a partnership.

“As a start-up, there are a lot of things that you haven’t yet mastered from a business perspective. First, never be afraid to ask for advice.

"Find a mentor and let them assist you. Next, if the right partnership presents itself, carefully evaluate it – as long as you both bring value to the table, you’ll be benefiting from invaluable systems and experience,” said Heyns.

Perfect partnerships

“The first thing to do, whether you’re evaluating a potential partnership or even brand synergies, is determine what you each bring to the table,” said Smith.

“Unless you each bring real value, it won’t be an equal partnership, and there are bound to be problems down the line. The next thing is to understand each other’s core values. We’re focused on service, brand and reputation.

"As partners you’ll be making joint decisions, so it’s incredibly important for your values to align. Rather be completely honest from the word go – you need to both know exactly what you’re getting into, and who you’ll be working with.”

“The right partnership can really take you to the next level. If done right, you’ll have a relationship built on mutual trust that complements your strengths, which is an amazing opportunity, particularly for a start-up. But if it’s not right, it can really damage your business.

"Before you rush into anything, take the time to really get to know each other, your respective businesses and visions. You want to start on the right foot,” said Heyns.

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