South Africa's Massmart is in advanced talks to buy a controlling stake in grocery delivery service OneCart Pty Ltd as part of a push to grow its e-commerce business, the Walmart-owned retailer has said.
Having long lagged behind much of the world in terms of e-commerce, South African retailers and delivery start-ups have been generating record online sales as consumers avoided shops during the COVID-19 pandemic.
However, the boom had strained the capacity of even the largest retailers, forcing them to double down on investments and e-commerce acquisitions to improve wait times and services.
'Invest And Accelerate E-commerce Growth'
"The proposed acquisition is consistent with Massmart's strategy to invest in and accelerate e-commerce growth, particularly in the fast growing on-demand delivery segment," Massmart Group Chief Executive Officer, Mitch Slape said.
The group hopes to grow rapidly and fully support OneCart's existing independent retailer marketplace model, he added.
Massmart first partnered with OneCart, which offers on-demand delivery from multiple stores using a marketplace model, last year through its general merchandise, food and liquor chain Makro.
Massmart said it hoped to conclude negotiations on the potential acquisition in the coming weeks.
In 2020, Massmart's online sales rose by 58.6%, the number of customers grew by 73% and click-and-collect orders rose by 69.5%, with e-commerce now contributing 1.8% of total sales, up from 1.1% in 2019.
Grocery retailers vying to emerge as e-commerce leaders have been complimenting their scheduled delivery and click-and-collect services with on-demand delivery.
Supermarket chain Pick n Pay last year bought on-demand online grocery delivery firm Bottles, later rebranded as Pick n Pay asap!, while Woolworths announced a trial launch in December of its Woolies Dash on-demand, same day grocery delivery app.
Pick n Pay reported a 21.4% decline in annual earnings for its financial year 2020, weighed down by a ban on the sale of alcohol and other products, as well as by one-off compensation costs.
Shoprite's Checkers had led the grocery retailers with same day delivery with its Sixty60 app before the pandemic.