Massmart looking to beef up its online retail with OneCart acquisition
The company says the proposed deal will allow it to expand its capabilities in the on-demand delivery segment
Massmart, owner of Game and Builders, has proposed buying a controlling stake in the privately owned grocery delivery company OneCart to beef up its e-commerce, a key focus of the retailer that has been investing heavily in online shopping.
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.
OneCart is an online shopping and delivery service that delivers goods to consumers from multiple stores, including Pick n Pay and Woolworths, but these chains have invested in their own delivery services.
Massmart had underinvested in online shopping and faced competition from Naspers-owned Takealot, but it is trying to catch up under CEO Mitchell Slape with a plan to use its wide network of stores as delivery sites. It is also improving Builders, Game and Makro’s shopping websites and the mobile shopping experience.
Last year Massmart appointed Walmart’s US-born Sylvester John to head up online commerce. 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 to ensure distribution centres are equipped to handle smaller or individual e-commerce orders which require moving a few items from shelves, as well as to deal with large orders which use different equipment to move huge pallets of goods.
Massmart, however, continues to struggle to break even and last week it announced it was writing down the value of assets at Game, one of its flagship retail chains, by about half-a-billion rand as the general merchandise retailer continued to lose hundreds of millions of rand for a third consecutive year.
This has raised concern that Walmart may walk away from the retailer, with some investors calling on the company to shut Game and focus on the more successful Builders and Makro brands.
In 2020, online sales across Massmart increased 58.6%, the number of unique e-commerce customers grew 73% and click-and-collect orders increased 69.5% off a low base. E-commerce contributed 1.8% of total sales.
“In keeping with the company’s strategy to invest in and accelerate its e-commerce presence, this potential acquisition will allow the company to further expand its capabilities in the fast-growing on-demand delivery segment while continuing to support the independent retailer marketplace model of OneCart,” Massmart said in a statement.
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