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Hammer and Tongues spends big to redefine e-commerce in Zimbabwe

hammer and tongues, e-commerce, online business Zimbabwe
   

Will e-commerce in Zimbabwe ever take flight? That question has never brought out easy responses. In fact, it sounds like rhetoric rather than the starting point of a solid discussion on local businesses thriving in the digital age.

We all get how e-commerce is this perfect junction for new age consumerism, commercial convenience and the possibilities that the internet can hold. What you get when you size up our country’s response to that opportunity isn’t encouraging yet.

Brick and mortar businesses that should be investing in it don’t see the value of online business while the majority of Zimbabweans that are excluded by realities like limited internet access haven’t noticed its benefits. Some, however, like Hammer and Tongues, are viewing the opportunity differently.

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The company, which is almost always associated with auctions, dived into online retailing in July 2015 when it went live with its own online mall. The launch highlighted Hammer and Tongues’ confidence in online distribution and brought the “e-commerce is finally here” debate back into rotation.

Seeing the opportunity

In the two years leading up to the online mall’s launch, the Hammer and Tongues team worked on creating an online alternative for its traditional auction business with the hopes of using the internet to allow buyers, both locally and abroad, to remotely participate in auctions.

A lot of effort was poured into the project and in the process, they realised that the platform could be harnessed for more than just auctions, thus giving birth to the online retailing functionality. This online retailer would position Hammer and Tongues as a seller and distributor of products from other retailers that would aggregate goods for users while offering retailers a new channel to push volumes.

Besides the technology being suitable for this, Hammer and Tongues had, over the years, developed competencies in logistics and built a brand that could command the attention of potential partners.

The site was launched as a mall, providing online retailing for diverse goods while also keeping with the plans for the online auction facility that had been envisaged initially.

What does the site offer?

The Hammer and Tongues Mall integrates catalogues from over 25 stores in various retail niches. Through these partnerships, it is able to offer goods that include household appliances, basic groceries and fast moving consumer goods, farm implements, school uniforms, clothing, DIY tools and even liquor.

Inventory from Hammer and Tongues’ offline auction business is also available, giving users access to auctioned and imported ex-Jap vehicles, a money lending service, real estate as well as cattle. There’s even been the auctioning of equipment like generators.

This creates the most diverse Zimbabwean e-commerce site, providing the widest range of products on a local online retailing platform, something that has contributed to a fair amount fo traffic.

When we spoke to the team at Hammer and Tongues, they were mum about specific numbers, other than the 1,200 visitors that the platform handles everyday. A notable chunk of these visitors are from the diaspora though Zimbabwean users are still the majority of users.

Partnerships, promotion, product and all the other right moves

As far as strategy for launching an e-commerce platform goes, Hammer and Tongues appears to be making the right moves so far. The platform has taken the core elements of a functional, competitive online retailer and incorporated them into its own DNA.

Firstly, there’s the aspect of product diversity. The one-stop-shop approach has managed to give Hammer and Tongues an advantage over other niche e-commerce platforms. User retention is amplified significantly, creating a greater opportunity for sales conversions.

Then there’s the use of an easy to use payment method, which, thanks to Paynow, means that mobile money is catered for. Complementing this is a strong brand name that sells the platform as a serious, credible and secure retailer that can withstand any scrutiny from e-commerce sceptics.

The same solid brand name has also helped Hammer and Tongues break down doors with a variety of retailers and providers that have partnered with it. Any other online retailing startup with less clout would struggle to pull in even half of the collaborators that Hammer and Tongues has managed to snap up that include listed entities like OK Zimbabwe and Colcom.

Also taken into consideration is the handle on logistics. The company had already figured out this aspect of retailing for its offline business. Now, it has extended these competencies to its online model where the value proposition of convenience heavily relies on the ability to send any product to a buyer’s doorstep.

There’s also a marketing strategy which has involved product promotions and discounts to create a buzz and make up for limited price discounts, as well as advertising through offline media and digital channels like SMS, email, and social media. Collectively these have helped Hammer and Tongues gain visibility even among potential users that are yet to embrace online retailing.

If you put all of this together you have a very aggressive online retailer that is making a strong play for market domination. The underlying element for these grand ambitions is the huge investment that has been made into this online mall.

According to information provided by Hammer and Tongues, the company has put together a team of 40 people to work on the online business. This includes technical support, staff at collection depots, hands in charge of logistics and the online support staff.

By our estimates (we weren’t provided with any figures related to this, these are purely based on market averages), the cost of such a business, including operational costs and some capital expenses, would push Hammer and Tongues’ commitment since July 2015, to at least $200,000.

It’s the sort of investment that hasn’t been seen before from other online retailers in Zimbabwe, and speaks volumes about the faith that has been placed in the internet and e-commerce. It’s particularly significant coming from a “previously offline” company that has, for the sake of growth, reinvention and diversity, looked at the online space.

The model that is being used – that is, the aggregation of products from offline businesses – also shows how brick and mortar retailers are looking for new distribution channels and, given the right approach, would consider the internet for that. Hammer and Tongues has managed to sell its ability to create that viable channel.

Will it work?

The big question is whether or not there is profitability from all of Hammer and Tongues’ efforts. E-commerce startups, even in economically stable markets, have a bad reputation for struggling to establish profitability. The investment is usually long term with unclear break-even horizons.

So far, Hammer and Tongues has managed to differentiate itself, ticking a lot of the right boxes for a startup that is learning from duds in Zimbabwean e-tailing. However, there are some aspects that it still needs to figure out to be a true success.

How will it grow its customer base and create returning users? Can it improve its user experience in ways that make it a strong choice for every potential consumer that is easily sucked into the screaming offline retail circuit? How much of an investment can it make as a company operating in tough Zimbabwe and how long a runway can it afford itself while it stretches out the dream of cracking online retailing locally?

These questions will be best answered by observations and expensive lessons on the nature of Zimbabwe’s online retail market and the data that will be gathered around growth potential. Only then will Hammer and Tongues know whether $200,000+ is enough to define the online retailing market or just to survive in it.


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