Massmart accelerates its e-commerce presence with acquisition
MASSMART is in the process of acquiring OneCart, an on-demand grocery delivery platform that enables customers to shop from multiple stores in a “single cart”, in a bid to bolster its e-commerce strategy.
Massmart, which owns Game, Makro and Builders Warehouse retail outlets, said yesterday that negotiations were at an advanced stage, and it hoped to wind up discussions in the coming weeks, pending finalisation of a few key matters.
“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,” said the group.
OneCart, which was founded by Lynton Peters and his partner Ariel Navarro, has been described as the “Uber of groceries” and has reached 400 000 check-outs since its inception in 2016. The platform provides access to products across the dry grocery, frozen and fresh foods, liquor, baby, health and beauty, household and pet supplies categories, all made available to consumers via a single shopping interface.
According to OneCart's website, the company strives to provide ultimate convenience and flexibility to the online consumer, and ensures that customers' experience is world class. It also aims to partner with malls and the retailers to ensure that it provides “this convenience and flexibility without an increased price to the consumer”.
The head of equities at Mergence Investment Managers, Peter Takaendesa, said Massmart's main product categories were a big target of the e-commerce companies such as Takealot and other new digital business models.
“Accelerating Massmart's participation in e-commerce is, therefore, key to their sustainability or else they will be reduced to a simple storage warehouse over the long term. Other traditional distribution business models such as auto dealerships (Motus) and food retailers have also recently acquired e-commerce assets to strengthen their participation in the growing online distribution economy,” Takaendesa said.
Massmart, whose e-commerce sales grew by 111 percent last year, is prioritising investment in its e-commerce offering to catch up with its competitors.
In October last year, the group announced the assignment of Theodore Sylvester John, the Walmart North America vice-president for last mile delivery, to lead its e-commerce team. Massmart said John had been key to launching and positioning Online Grocery Pickup in the US and establishing Walmart's last-mile delivery organisation, delivering from more than 3 000 stores in more than 500 US domestic markets that account for more than 65 percent of US households. The OneCart acquisition comes days after Massmart announced it was selling most of its fresh food produce stores to Shoprite for a total consideration of R1.3 billion.
Massmart said on Friday the transaction would see Shoprite, Africa's biggest retailer, taking ownership of Cambridge Food, Rhino and Massfresh comprising The Fruitspot and a meat-processing facility, as well as 12 Cash & Carry stores transferred to Shoprite Checkers. It is expected that the transaction will close early in the first quarter of next year.
In an effort to turn around the lacklustre financial performance, Massmart closed its 23 non-performing Dion Wired stores, and ceased operating 11 Masscash stores. It also announced measures to get Game stores back to profitability, including the exit of fresh produce and the introducing basic apparel.
Massmart's shares closed 0.91 percent lower at R56.35 on the JSE yesterday.