Before Trevor Gosling founded Lulalend, now Lula, he was the owner and founder of 5ounces, an eCommerce store that sold gourmet food, craft beers, premium wines and wine accessories at amazing prices. The 5ounces platform became a firm favourite to food and wine lovers across the country, and the go-to place to get a good deal on good quality produce and products.
Trevor later sold 5ounces to the Naspers Group and has gone on to start Lulalend, an online lender for small businesses. With experience in eCommerce, and having the knowledge of what it’s like to get a small business off the ground and keep it growing, we touched base with him to ask a few questions.
How did 5ounces start?
My brother and his business partner at that time started Groupon South Africa. I’d seen this business model really take off and was aware of other companies like Gilt doing something similar, so I set out to start 5ounces with the view of offering premium products at affordable prices. The difference was that we took more of a flash sale approach; we never had very much stock on hand and when it was gone it was gone.
What were the biggest challenges in the eCommerce space?
Early on the biggest challenges were understanding the eCommerce space and trying to get familiar with the industry, how to market an eCommerce store, where to spend our budget and just trying to understand the tech and developer world.
Supplier relationships were also somewhat of a challenge. We had great suppliers but their way of doing business was more traditional and offline – buying upfront not online. It wasn’t familiar territory for them. So we had to work hard to encourage them to get on board with us and sell their products online. Once we had developed trust and established good relationships with them things got easier.
Later down the line, these challenges changed and it became about things like how to scale the business and access capital to make new hires, find a warehouse and continue to market the business.
What are your thoughts about eCommerce in South Africa?
eCommerce has quite a negative connotation in South Africa and it’s difficult to make decent money. But this is changing. Big corporates like Woolworths, Mr Price and others have moved into the online space and the likes of takealot, where sellers can leverage this platform, are helping to grow the industry. The eCommerce space has a long way to go but I feel very positive about it. There is a lot of potential. Look at retail stats – around 1% of retail shopping is done online. So there is a huge amount of growth potential.
How do local eCommerce businesses compete with much bigger competitors overseas?
I think it is important for any local business to keep in mind that we have some outstanding local product and service offerings across South Africa. Ask yourself what you can offer that foreign businesses can’t, or aren’t. Purchasing something from outside the country involves shipping and delivery costs, by buying and selling locally will benefit your business and your buyers Saving on costs like these is just one of the ways local businesses can encourage customers to buy from them.
What advice would you give to those in eCommerce or thinking about starting an eCommerce business?
Don’t go too niche – this can make it hard to scale your business later down the line. You’ll hit a ceiling eventually and only be able to grow to a point.
Don’t invest a ton of money into developing a website up front. Rather make use of other resellers like takealot and bidorbuy to measure uptake there before spending large sums of money on web development. Make use of what is available – you don’t want to custom develop too early on. Getting capital isn’t always easy so rather spend it where it is really needed instead of on what you think is needed.
Lastly, put your customers first in your decisions and dealings with them. They won’t all be easy to deal with, but if you can make your toughest customer walk away feeling happy and treat every customer like that you’re winning the customer service game.