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The Direct-to-Consumer Business Taking Facebook by Storm

4 October 2018

How 20-year-old entrepreneur Sakhile Maseko built Aumax, the luxury watch retailer shaking up the industry with a simple maxim – ‘try before you buy’

 

When then 18-year-old Sakhile Maseko’s university bursary fell through, a lightbulb went on. ‘Instead of feeling sad, I felt excited. I thought: right now, I can do whatever I choose to do. I can follow my calling. And that’s when I started Aumax.’

Now a thriving direct-to-consumer business with a differentiating edge, Aumax sells luxury products such as watches directly to South African consumers using a unique platform – Facebook. The start-up also offers a ‘try before you buy’ experience of cash on delivery. Delivery itself happens a maximum of 24 hours after an order is placed.

Built with starting capital of just R3 700, today Aumax is growing rapidly, employs 15 staff and enjoys the support of Silvertree Investment Holdings, the investment growth partner behind a number of promising South African startups – among them Pricecheck.co.za, CompareGuru.co.za, Petheaven.co.za, Faithful-to-nature.co.za, Cybercellar.com, Ucook.co.za and CarZar.co.za.

‘The biggest challenge in this industry is finding the right entrepreneurial talent,’ notes Paul Cook, co-founder and Managing Director of Silvertree. ‘But Sakhile is clearly just that – highly pragmatic and focused on finding solutions. That was very exciting for us.’

Following a calling

‘Most young South Africans aren’t encouraged to be entrepreneurs,’ Sakhile begins, of the journey that has taken him to where he is. ‘After school, my plan was to go to university as I got a bursary from the municipality. However, three months later, the cash hadn’t reflected and the university and residence fees had to be paid. So, I couldn’t continue. But instead of feeling sad, I felt excited. I thought: right now, I can do whatever I choose to do. I can follow my calling.’

With no accommodation and little more than the three-and-a-half thousand rand he had managed to liquidate from personal belongings, 18-year-old Sakhile began contact overseas watch suppliers.

‘Suppliers won’t look at you if you’re only buying very small quantities,’ Sakhile notes. ‘Still, I convinced one supplier to send over a few samples of his product and I started selling those. We began to develop a relationship after he began to see my determination to grow the business. After selling the first R3 700-worth of watches, I reinvested the profits and continued growing and setting goals, determined that I would do whatever it took to make the business a success.’

However, it wasn’t all plain sailing. Unexpected import fines from SARS, a consignment that couldn’t be sold due to a market glut and financial overextension meant that Sakhile had to, at one point, start over. ‘I was employing five people at the time and letting them go was incredibly hard. It was the first time that I wondered if I should have just gotten a normal job.’

Yet, undeterred, Sakhile redoubled his efforts. ‘During that difficult period, I got closer to my clients than ever before. I asked them what they wanted, and how Aumax could really add value. It soon became clear that what many people wanted was the retail experience – being able to try something on before they purchased it. So I looked to create that. Today, I know how important quality is. As are relationships with customers. Most online retailers insist that you ship a defective good back to them at your own cost. At Aumax, we come to your home and replace any item, or give you your money back. Long-term thinking is crucial. Getting – and keeping – customers is key. It’s about solving problems and keeping your customers happy.’

Starting a journey with a growth partner

‘Sakhile emailed us with some exciting numbers and facts about what he was doing,’ Paul explains. ‘It was sufficiently interesting for us to set up a meeting. It soon became clear that this was an investment where we felt we would be able to add a lot of value. Sakhile had a very promising business from an economic point of view, as well as an incredible entrepreneurial drive. What he lacked, in addition to working capital, was experience with matters such as hiring and managing a growing team, processes, compliance and so on – exactly the things we know about.’

Any consumer-facing business must master three domains, Cook notes: ‘First is the product. Second is the customer service and experience. And third is the marketing. Essentially, what Sakhile has done is work out how to source really good products and how to deliver quickly. But he’s also found a way of effectively marketing his business on social media – something that very few e-commerce retailers in South Africa, and even very few globally, have got right.’

Getting ready to scale

‘Right now,’ Paul emphasises, ‘the priority is getting all the processes in place to be able to grow and scale the business. One of the big challenges is that many South Africans lack an entrepreneurial mindset. As a society, few people go the route of their own business, at any scale, big or small. That’s one of the things that’s so interesting about Sakhile. In a situation of huge personal risk, he decided to start a company, rather than fall back on the traditional route of getting a job. For us, both now and long term, it’s about sharing best practices.’

‘What I’m proud about for us as Silvertree is that we were able to invest on the basis of Sakhile as an entrepreneur and the underlying business model,’ Paul stresses, ‘rather than a formulaic due diligence process. We were able to look past the usual box-ticking exercise and do a great deal – a deal that would have been a struggle to conclude for a less hands-on investor.’

‘Because of the Silvertree team’s experience as entrepreneurs, they’re able to shine a light on the entrepreneurial journey you want to take, and what you need to watch out for,’ Sakhile notes.

By the time of Silvetree’s investment, Sakhile’s R3 700 starting capital had already turned into a business with over R100 000 in monthly revenue. Silvertree’s support has since seen Aumax’s growth further accelerate, with effective hiring an increasing focus.

‘There are huge opportunities in South Africa, particularly in the consumer space,’ Paul notes. ‘It’s about being willing to take the leap.’