MORGAN BARNARD: Welcome to the Moneyweb Grindstone podcast, with me today is Jens Herf, founder of Shopstar. Shopstar is another company that incubator initiative, Grindstone, will be supporting in the years to follow. Can you please tell us a bit about the company and how it works?
JENS HERF: Shopstar essentially enables e-commerce for small businesses and it’s an online platform which allows small businesses to setup cost effectively and quite easily setup their own online shop. They essentially visit shopstar.co.za they start a registration process and very quickly get going with setting up the shop. We’ve been around for just over a year, probably about 18 months, and we’ve just gone past or we’re close to 1800 registered shops to date. It’s predominantly focused on the SME market, the smaller businesses. A lot of our clients are more from the design sector, jewellers, people who create leather goods, hand bags, wallets, etc, that type of thing.
MORGAN BARNARD: What are your plans to grow Shopstar?
JENS HERF: Well, what we did in the first year is we developed the architecture and the product. We had a strategy session at the beginning of this year, which was quite interesting because what we had achieved in our first year, the first 12 months, was to develop a product where people can setup their online shop, the transactions work, it has all the functionality that is required for an online shop. But the difficulty for these younger brands is actually to market themselves, so what we’re focusing on this year is to look at the trust architectures, similar to what APNV has done with bringing in social graphs from social media to linking up various different shops. Maybe a better way of explaining that is if you look at a market place or let’s say in Cape Town at the Biscuit Mill, these brands build communities around each other and these communities overlap, so one small brand actually helps the other brand market each other. So we’re building similar types of concepts using technology where we can actually get essentially centralising user profiles across multiple stores and allowing people to then run recommendations, so one brand can recommend another brand, so to speak, through endorsement models. But it’s essentially looking at how can we in the digital space provide an opportunity so that these small businesses also…it’s not just about having an online shop but it’s also about driving more trade to the store, etc.
MORGAN BARNARD: Where do you see Shopstar and yourself in a year from now?
JENS HERF: Well, we’ve been very active in the Western Cape, our objective is to have a much stronger presence in the rest of South Africa so that in the future we would also like to get into the rest of Africa as well. At the moment we are also in conversations with shopping centres to look at what you call the omni-channel approach, where shops have multiple access. Many of our stores actually have physical locations as well, so they use the point of sale system and their online [shop], they combine their sales through that. The objective that we’re discussing with shopping centres is actually to see if we can’t build concepts around online and offline, where we don’t believe in a typical online environment but a combination of both. So I hope by the end of the year that we have some relationships in place, which will just facilitate that whole process.
MORGAN BARNARD: What do you think are the biggest challenges facing entrepreneurs in South Africa?
JENS HERF: I think one of the things that we see is fear, people are very scared of the online space, they’re not quite sure how it works, they get mixed up with logistics, payment gateways, etc. What we always advocate or say is that technology optimises what we do and when you’re creating an online shop it’s really not that difficult. It’s a big challenge for a lot of young brands that we deal with, they have beautiful products but they’re not quite sure how to set up all their business structures, they’re not quite sure how to get out to their market and how to build their brand essentially. So I think there’s a massive opportunity in assisting these brands with that. We’re seeing it with a lot of our stores because essentially we’re providing them with an opportunity where with every transaction there are certain steps that take place, there’s an invoice, if the product needs to be shipped it gets shipped and Shopstar sends out communication to the client as well. So we’ve almost given a preset of how to run their business but what processes they need to go through. So what we’ve seen is a massive amount of growth in a lot of our stores over a very short period of time just because their systems are better through technology itself. So to answer your question, I think one of the massive barriers is that people are scared of using technology or embracing it.
MORGAN BARNARD: Because people are too scared to go into the online space do you think they resort to Facebook and how does that work with Shopstar?
JENS HERF: No, essentially what you’re doing is you’re just syndicating your product onto different platforms. So it’s building a Facebook shop, which is linked up to your store itself. But to be quite honest, it’s just creating another storefront. If you’re marketing in sectors, we have a client, Dear Rae, she’s grown her Facebook page itself from 200 to over 10 000 likes organically, she doesn’t need a Facebook store because people will engage on the Facebook page but then they’ll go to the shop itself and they’ll purchase from there. We say that we are focusing on social media, so essentially we will be centralising users across multiple stores. We are releasing functionality where they login with their social media profiles and we can then attach that to the social graphs. So inside the system we’ll be able to see for instance if you’ve bought a product you’ll be able to see if someone else in your social circle has bought that product and what products they have bought or you’ll be able to start searching for products based around your own social circle. So it’s essentially looking at the offline word of mouth type of concept. So we are focusing on social media but it’s not necessarily to create another storefront on a different platform because we don’t believe that that will necessarily lead to more sales. If you have a strong community built around your brand people will through those channels come to the online shop.
MORGAN BARNARD: We have recently seen that iKubu, another one of Grindstone’s businesses, has been sold to Garmin. What role do you see Grindstone playing in your business?
JENS HERF: We’ve just had our first workshop and already meetings have been setup with key players. We had been speaking to some larger brands already last year and often they say we’re a small startup company but being part of the Grindtsone programme is opening so many more doors because we’re getting the credibility that we deserve. Having seen what Grindstone did last year, especially with the exit to Garmin, you can see how valuable it is and we are right from the start we are seeing results. So as a company we’re very fortunate and very excited to be part of the programme because they are quite strict in terms of who they let on and who comes onboard. I’ve got meetings lined up, I may have had before but now I’m going in with just the backing of the Grindstone programme, nice capital, which helps us immensely.
MORGAN BARNARD: That’s fantastic. What is your number one tip for entrepreneurs in South Africa?
JENS HERF: If you have an idea try it, if you fail, fail quickly, try it again. Stop being scared. We need entrepreneurs in this country, entrepreneurs are the people who create jobs and even if you’re only creating one job, you’re employing one person. You’ll figure it out, ask questions, people are always willing to help. Just go out and do it and stop being scared, so that’s what I would say. That’s how we started, that’s how I started.
MORGAN BARNARD: That was Jens Herf, founder of Shopstar.