Shop-Net

Shop-Net Logo

From their investigation into the spaza market of South Africa, the TTO identified many challenges and obstacles facing spaza shop owners in trying to run successful micro enterprises. Although different actors in the market identified various problems, the TTO concluded that one of the greatest weaknesses was the supply chain that the shop owners were using to obtain their goods. In order to address this problem, the TTO developed a business collaboration network among spaza shops. This effort grew to become the TTO’s Shop-Net programme, created in 2004 (tto.org).

Shop-Net is an acronym that stands for Spaza and House-shop Owners Partnership Network. The basic idea behind Shop-Net is that many spaza shops sell the same types of goods to their customers, and because of this have common supply-side needs, see Figure 4 for more information. In addition, most shops receive no special treatment or discounts from the suppliers that they obtain their goods from; spaza shops are simply too small, undocumented, and in some cases too transitory for larger suppliers in the formal economy to cater to. In an attempt to help alleviate this problem, Shop-Net identifies common products sold at many spaza shops. Then, by combining the buying power of many spaza shops, Shop-Net approaches the appropriate suppliers and negotiates better discount rates on goods because they are capable of buying in bulk. This allows shop owners to get their inventory at cheaper prices, making their shops more profitable, and also allows them to pass better prices and value on to their customers. Offering better value to customers then creates more business for them, and makes their shops more successful (SASIX, 2009; Southern Hemisphere Consultants, 2007).

Shop-Net Graphic (SASIX, 2009; Bear, 2005; Tladi & Mielhbradt, 2003)

The TTO has a recruitment packet that they provide to shop owners in order to generate interest in the Shop-Net programme. Shop-Net does charge membership fees, but owners receive three main benefits from their participation: linkages to manufacturers and wholesalers, membership in to the voluntary buying groups, and access to new business services (tto.org). So far, the Shop-Net programme  has seen considerable success. As of 2007, there were around eight hundred shop owners signed up for the Shop-Net programme (Southern Hemisphere Consultants, 2007). Shop-Net’s voluntary buying group is also growing. According to the South African Social Investment Exchange, between February and May of 2009 R851 294 was spent through the Shop-Net buying group. Between June and September, shop owners spent R870 674. In addition, as of September 2009, the number of repeat orders being placed through Shop-Net is up to 1,146 (SASIX, 2009).

In addition to offering more competitive prices on goods, the Shop-Net programme helps provide BDS to shop owners. For example, now that Shop-Net is coordinating better deals through suppliers, they provide better distribution services to the shop owners. Instead of having to pay for a taxi and travel to pick up their inventory, and only be able to bring back a limited number of supplies, the shop owners can now have their goods delivered to them at an affordable rate. Shop-Net is also beginning to see other benefits from their efforts. Now that suppliers can see the spazas as an accessible market, there is competition for Shop-Net business and they can also obtain goods that are targeted at the spaza market, such as more effective unit sizes on goods. For example, manufacturers are now willing to provide half-loaves of bread to spaza shops, since many customers prefer to buy half-loaves over whole loaves. The long term goal for Shop-Net is to build it in to a franchise that charges membership fees so that it can become self-sustaining and still offer its valued services to shop owners (Southern Hemisphere Consultants, 2007).

Overall, the Shop-Net programme is the TTO’s attempt to address several key expressed needs of shop owners- better discounted rates and special offers from product suppliers and a more convenient distribution system for goods. Because the TTO has based the design of their programme on the needs of the target group, spaza shops, the Shop-Net programme has seen a significant amount of success in assisting spaza shop owners to run more profitable, successful businesses that better cater to the residents surrounding their shops