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Case Studies

Banditos: Doris And Kian Macrae

A couple turn their passion for chilli into a booming local and international business.

Juliet Pitman



Doris And Kian Macrae of Banditos

Very often it’s the small ideas that leadto big successes. Take the story of Bandito’s Chile Company, for instance. In1993, co-founder and then-high school teacher Kian MacRae was working at aMexican restaurant on the weekends to earn some extra cash when the emptytequila bottles generated each night behind the bar sparked in him the idea tobottle a home-made chilli sauce.Modifying a chakalaka recipe from afriend’s mother in Zululand, he and his wife Doris borrowed two 50 litre potsand, on the balcony of his brother’s Yeoville flat, set about cooking up thefirst batch of what was to become a truly home-grown entrepreneurial successstory. What started out as a small cottage-industry, weekend-sideline businesshas, in the past 14 years, developed into a highly successful enterprise thatsupplies the major retail outlets in South Africa and exports to 20countries around the world.

Humble beginnings

But, as Kian and Doris relate, it didn’tstart out big. In fact, Bandito’s had very humble beginnings. Kian designed thevery first Bandito’s label and printed out black-and-white copies on the schoolphotocopier before pasting them on the tequila bottles that originally sparkedthe idea. “We sold the first batch to family and friends – in fact, the veryfirst bottle was sold to some guy in the elevator of the flat where we’d madeit!” he laughs, while Doris adds, “To be honest, we didn’t really have anythinglike a business plan. We just both love chilli and wanted to make a greatchilli sauce from fresh natural ingredients. We had no idea how big it would become.”

To market

With the popularity of their chilli saucegenerating a growing demand (Doris explains that chilli is, after all,addictive) the MacRaes took a stand at a flea market in Fourways, recruitingMatric students from Kian’s school to man it. “That market closed fairly soonafterwards but the following year we took a stand at the Rosebank RooftopMarket, where you’ll still find us today,” says Kian. As Doris relates, it wasat that point, in 1994, that they realised they might just be sitting on apotentially successful sideline business and registered the Bandito’s ChileCompany. “But even then, even with the fan-base we’d developed, it was stillvery much a weekend thing,” says Kian.

Turning points

The turning point came when a journalistfrom the Saturday Star newspaper expressed interest in doing a story onBandito’s. “Initially we weren’t all that keen, because this was reallysomething we were doing on the side, but she was so persistent and one daycalled us up to say she was coming the next day, so we didn’t really have achoice!” remembers Doris. The story appeared on the front page of theentertainment section and generated a big response. “It gave us fantasticpublicity,” she adds. The same year, the couple was offered astand at the Lusito Land Portuguese Festival. “We didn’t have enough money forthe whole stand so we shared it with a salami stand. We sold out on the firstday. We just couldn’t make enough sauce – it was so popular. I cooked throughthe night to try meet demand,” says Kian.

Findinga home

Unable to ignore the potential of the businessas a full-time concern any longer, Kian left teaching the next year and thecouple worked from home, converting a room in their house into a chillikitchen. Shortly afterwards they bought a house in Queen’s Street, Kensington,after being granted a bond by the bank. “We worked on it for six months,converting the front part into a deli and Mexican cantina and the back partinto an industrial kitchen. Doris studied at hotel school so she knew what wasrequired of the kitchen,” says Kian. Their consistently good turnover from themarket-trade sustained the business and the couple used the money made from theLusito Land festival to pay the builder. It was to be the business’s home forthe next seven years, before they outgrew it and moved into their current Kewpremises, which was purchased ready-made in 2003 as a food manufacturingfactory.

Early challenges

Looking back on those early years, Kian andDoris agree that some of their earliest and most significant challenges camewith their move into big retail chains. “We didn’t understand things like foodbrokers and listings and buyers so we outsourced these functions. Going intoretail outlets also puts enormous stress on your cash flow because you have tosupply the warehouses with two months’ worth of stock and you only get paid 90days later,” says Kian.

The couple sold 10% of company shares eachto two partners in order to manage the cash flow and growth. “Usuallydistributors want products with a long track record but a national distributorgave us a chance because they believed we had a product with great potential.They handle the distribution, warehousing, book and merchandising for us,” addsDoris.Spar, Pick ‘n Pay, Hyperama and Shopritewere among the first national retail outlets to stock Bandito’s followed byWoolworths two years later, and the business was well and truly on its way.

Setting high standards

Retail brought other lessons too. “The bigretailers audit your entire operation. Pick ‘n Pay audits us once a year andWoolworths does two audits – one operational and one ethical. The HealthDepartment also audits you and you have to be able to trace every ingredient inyour product, right back to the farm where it came from,” says Kian. But headds that while many manufacturers find such audits threatening, Bandito’s hasalways embraced them. “They only help us to be better, and to deliver a betterproduct to our customers,” he says. “Right from the word go, our passion hasbeen to create a natural-ingredient chilli product without colourants orpreservatives and we’ve never wavered on this. We’ve always remained fanaticalabout the quality of what goes into our products so any quality-based auditties in with what we stand for,” adds Doris.

Staying close to the consumer

While getting into retail stores is onething, ensuring you have a product that moves off the shelves and generatesrepeat orders is another thing altogether. “It’s critical that your product isunique and special enough to stand out from everyone else’s when it’s on theshelf next to all the others. You also have to keep up the consumer’s interestin your brand,” Kian says.Often, the latter is achieved by expandingthe product range, but Kian has a word of warning. “Food trends tend to go incycles and often there’ll be a glut of different product variants from a wholelot of ranges, but then the retailers will cut these down to include only theones that move off the shelf.” This can mean a lot of money wasted on newproduct development.

“The way we’ve done it is to listen veryclosely to consumer requests. People came to us and asked for a milder or asweeter sauce or a relish and we developed new variants based on this feedback.In this respect, keeping a stall at the Rosebank market has been veryimportant. It’s helped to ensure we stay close to the coalface, close to ourcustomers,” says Kian. “It’s also given a human face to Bandito’s and this isimportant for the brand’s personality.”

Creatingan export brand

Brand personality was to prove central tothe company’s export success. Bandito’s is sold under the Mama Africabrand-name overseas, and Doris explains why: “There are so many chilli sauceproducts on the overseas market that we just felt it would give us an edge tomarket an African product, hence we created the Mama Africa brand. We are aProudly South African company and believe – and have proved – that our chillisauce can compete on the world stage with anything from Mexico. So ourAfrican-ness was very important to us.” The brand’s pay-off line, “Made Southof Mexico in Africa” cleverly draws on the Mexican chilli reference whileentrenching the product as South African.

Passingthe export test

The company’s first foray into exportingtook place in Australia in 1998 on a small scale after Doris launched theproduct line at an international chilli festival. She highlights the importanceof having a presence at international food trade shows and expos to anyoneinterested in exporting a food product. “There are three main ones that youhave to go to – one is called Sial and is held in Paris every second year, witha Cologne show called Anuga held every other year. Then there’s also the FancyFood Show in New York every year.”

Kian adds, “You’re in a market you knownothing about initially and you can’t assume that because a product works hereit will work elsewhere. Being on those shows gives you exposure to the entireworld because every buyer from every supermarket chain in the world goes to thebig shows. In addition to this, if you want to launch a product on theinternational stage, you have to have a unique product with seductive packagingand a strong brand personality.”Both of them agree that the partnershipsformed with overseas distributors are critical to export success. “You want topartner with experts who know what they’re doing and are willing to carry someof the financial risk,” says Kian. “We nearly got our fingers badly burnt oneyear when our food broker ordered around R800 000 worth of stock for Sainsbury,which we sent over. But he didn’t pay us and wouldn’t return our calls –eventually we sent him a fax threatening to hand him over to an internationalcredit bureau and we got our money. If we hadn’t, the company would have beenin big trouble. So you need to be careful about who you choose as partners,”Doris cautions.

Looking ahead

Today the Bandito’s Chile Company exportsto New Zealand, Canada, USA, Japan, Russia, Malaysia, Poland, Sweden, Finland,Norway, Denmark, Germany, UK, France and Austria, and the Kew factory has a dailyoutput of 8 000 bottles. “This year, we’re focusing on growing our profit andgetting HACCP certification, which is an international food standard. We’realso very interested in the prospect of a restaurant or food outlet partnershipthat will leverage the Bandito’s brand,” concludes Kian. With a track recordand brand strength like theirs, there can be no shortage of takers.

Exploiting other opportunities

With a foot in the retail door,Bandito’s was able to exploit other opportunities that existed in the retailspace, creating home-brand ranges for outlets such as Woolworths and specificproducts for Pick ‘n Pay.

Diversifying the product range:today Mama Afrika and Bandito’s ranges consist of six hot sauces, threerelishes, salsa, pickled jalapeno, three flavours of corn chips, tortillas andtwo cooking sauces.

Chilli is one of thefastest-growing food types in the world. Consumers are more aware about thedifferent types and strengths of chilli than ever before, as well as thedifferent combinations, such as chilli and chocolate, or chilli and mint. Theyare also more creative in their cooking.

Bandito’s is well aligned withthe move towards healthy and fresh food. Chilli is known to be high inanti-oxidants and vitamin C and is reported to improve metabolism.

Exporters Advice:

International trade shows areinvaluable in helping you to test potential market response and in giving youexposure to buyers from supermarket chains all over the world

Get in touch with theDepartment of Trade and Industry – they provide a lot of assistance toexporters

Be aware of the differentlabelling laws that pertain to each country. The United States, for example, isvery specific about what you need to include and where on the label theinformation needs to appear.

Finding the right internationalpartner in each country is probably the biggest challenge. Only formpartnerships with importers who are willing to carry some of the risk becauseit means they will be motivated to move your product. They should also have aproper set-up and the right connections.

Take baby steps because youhave to be able to keep up the supply. You want sell-through and repeat orders,not just sell-in.

Juliet Pitman is a features writer at Entrepreneur Magazine.

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Case Studies

Starbucks Coffee Is All About Culture… For A Reason

CEO Howard Schultz reveals how Starbucks does it.

GG van Rooyen




Vital Stats

  • Player: Howard Schultz
  • Company: Starbucks
  • Market cap: $85 bn
  • Established: 1971 (Schultz purchased the brand in 1987)
  • Website:

When Howard Schultz was raising money for his first coffee shop called Il Giornale (later to be renamed Starbucks) he was finding it hard to land investors. The reason was simple: Schultz was trying to create a coffee culture where none existed.

The idea that the man on the street would pay a premium price for a cup of Italian coffee with a name he couldn’t pronounce seemed nothing short of preposterous. But that wasn’t the only reason people weren’t willing to buy into his idea. Schultz, you see, refused to talk like a proper capitalist. He kept emphasising the fact that he wanted ‘to do good’.

Related: How tashas Built A Recession Proof Business

Schultz recounted the trouble he had finding investors during a recent visit to South Africa for the local launch of Starbucks. He spoke at a Q&A session hosted by the Wits Business School.

“My wife was eight months pregnant at the time,” says Schultz. “Her father actually sat me down and said: ‘My daughter is pregnant, and she’s working. You have a hobby. You need to get a job.”’

But, as is so typical of entrepreneurs, Schultz persevered and eventually got the funding he needed.

“The first time someone gave me $100 000, I couldn’t believe it,” he recalls.

Since those early days (the shop opened in the mid-1980s), Starbucks has grown rather prodigiously. Consider the following: By the late 1980s there were 11 Starbucks stores that employed about 100 people. A few years later, in 1992, the company went public with a market cap of $270 million. Today, it has around 24 000 stores in more than 70 countries. And its market cap? A cool $85 billion.

While growth is good, it has a tendency to birth a ravenous monster that is impossible to satiate.

“We have to add $2,5 billion in revenue every year for the next five years just to maintain our current growth rate and satisfy Wall Street,” says Schultz. “And to do this, we will need to add 80 000 employees over the next 12 months. Essentially, we’re launching a new massive company every year.”

Yet, despite this, Starbucks manages to maintain its unique culture. Just as when Starbucks was a far smaller operation, it is known for stores manned by high-energy individuals who have a clear love for the brand. How has the brand managed this? Schultz attributes it to the following seven core principles.


1. Partners not employees

Howard Schultz’s father worked as a truck driver, delivering and picking up cloth diapers in the days before Pampers. When he slipped and seriously injured himself, he was summarily retrenched. Schultz wanted to create a very different company.

One of the reasons he didn’t adopt a franchise model was that he wanted to be able to offer each employee at least some stake in Starbucks.

When the company went public, each employee became entitled to a portion of their annual salary in the form of stock options. That is still the case today, which is why Starbucks employees are called ‘partners’.

“Success is best when it’s shared,” says Schultz. “At Starbucks, we always ask: What’s in it for our people? Starbucks is accused of being great at marketing, but it spends very little on marketing. It’s all about the experience we offer in the stores.

Managers and leaders must do everything to exceed the expectations of our people so that they can exceed the expectations of our customers.

Related: Howard Blake Stays Hungry With His Innovation Strategy

2. Regular interaction

The management of Starbucks does everything in its power to engage with employees regularly.

“We travel extensively, and the amount of face-time management has with employees across the globe is really unusual for a company of Starbucks’s size,” says Schultz.

Schultz himself, for instance, sat down with each and every new Starbucks employee in South Africa during his recent visit.

Starbucks also has what it calls ‘Town Hall Meetings’ all over the world, during which management interacts with employees in an open and informal manner.

“We tell employees that they are free to speak up during these meetings without fear of retribution. We want honest opinions,” says Schultz.


3. Respecting (and cherishing) employees

Howard Schultz is a humanist at heart, and this is reflected in the culture of the company that he created.

“The universal language of Starbucks is a deep sense of humanity,” says Schultz. “Building a company is a lot like raising children. You are imprinting a company with a culture and a set of values. Now, if a child falls, what do you do? You pick it up and comfort it. You don’t scold it. You need to take the same approach in business.”

4. Protecting the culture

Being tolerant of failure, however, does not mean the same thing as indulging bad behaviour. In fact, Starbucks is fiercely protective of its culture, and it doesn’t tolerate bad behaviour.

“We teach employees that they have a voice, and that they should speak up when they see someone doing something wrong. You can’t enable bad behaviour because it will erode a company’s culture.”

Related: Don’t Let Expansion Ruin A Great Company Culture

5. Spending money on employees

According to Schultz, the management teams of most large companies would be horrified to discover the amount of time and money spent on Starbucks employees.

“We have been very innovative with technology, and we have created a massive digital eco-system. Interestingly, though, we spent as much time and money focusing on the things that were employee-facing as the ones that were customer-facing.”


6. Rewarding the right things

Schultz famously stepped away from the role of Starbucks CEO for around five years, and during that time the culture of the company quickly deteriorated.

“The company lost its way. The people who were managing the company — who were all good people — were measuring and rewarding the wrong things. Things such as profit and stock price became the focus. In any business, you need to continuously ask: What is our core purpose for being? Otherwise you lose your way.”

Schultz believes that his big mistake was not selecting a successor from within the culture. When he eventually retires, he intends to choose someone from within the operation who is in touch with the culture of the brand.

7. Being human

The film Fight Club famously depicted Starbucks as the epitome of the faceless corporation taking over the globe, but the company is actually quite unique in its willingness to speak out and engage with people on a social (and even political) level.

“We are very outspoken as a company. We feel that we live in a time where the rules of engagement have changed. What I mean by this is that we need to do more for the communities that we serve. The question we ask ourselves is: What is the role of a for-profit public company? Looking at this question has resulted in us taking on social issues such as same-sex marriage, gay rights, gun control and racism.”

For example, Starbucks recently unveiled its first store in Ferguson, Missouri (which has been plagued by racial unrest) as part of a plan to support efforts to rebuild and revitalise communities.

Read next: 5 Inexpensive Ways to Create a Company Culture Like Google’s

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Case Studies

How Merchant Capital And Retroviral Were Built To Sell

Entrepreneur chats to Dov Girnun of Merchant Capital and Mike Sharman of Retroviral. We explore why their companies attracted funders, and how the relationship can be used to grow their businesses.

Nadine Todd



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The Tech Based Business

Know your business’s numbers inside out, and don’t try to bluff your way through any questions that relate to numbers.


Vital Stats

  • Player: Dov Girnun
  • Company: Merchant Capital
  • What they do: Lending solutions for SMEs
  • Est: 2013
  • Investor: Rand Merchant Investment Holdings
  • Shareholding: 25%
  • Visit:

Less than two years into his business, Dov Girnun attracted the attention of Rand Merchant Investment Holdings (RMIH), a financial services investment company that includes the founders of FirstRand, Laurie Diepenaar, Paul Harris and GT Ferreira. These are no small industry players. On an investment level, they’re the funders who backed Adrian Gore when he launched Discovery and Willem Roos when he started OUTsurance.

How had Girnun found himself in the position to pitch to investors at this level? Months earlier, RMIH had launched a fintech incubator called Alpha Code. The idea was to find pre-revenue start-ups that would be the next game-changers. Their research brought them to Merchant Capital.

“We didn’t exactly fit their mandate because we were already operational and profitable,” says Girnun, “but they still really loved the business. They’d been researching the fintech space, and had recognised the potential in SME lending, which is our focus. They really wanted to invest, but at the time I was unsure if I wanted to dilute my shares further.”

Girnun already had an investor, the Capricorn Group, whose investments include Hollard, Nandos and Clientèle, and until this point he’d been careful to maintain his shareholding. His relationship with Capricorn was excellent, as the investment team added huge strategic value to the business over and above capital, and so he hadn’t been actively seeking additional funding.

And then a new opportunity presented itself. “We realised we have golden data on the SME space. How could we cross-sell to our base and monetise that data? We started chatting to RMIH, who were aligned to our thinking.

“Once I realised the value RMIH could add to our business, my whole perspective shifted. Here was an investor that could potentially help me to build a billion dollar business. I’d be diluting shares, but building a much bigger pie.”

Related: Funding Growth with Dov Girnun

The price of equity

Girnun is referring to the investment lesson that equity is cheap early on, and very expensive later, when a funder holds more shares of your business than you do. If you look for funding later, your valuation is higher, you’ve got a proven track record, and the same amount of money secures fewer shares. Sell too early, and the exact opposite happens.

This had always been Girnun’s view, but an understanding of how far the business could potentially go with RMIH’s backing was changing his mind.

There was just one challenge. While RMIH’s investment team loved Merchant Capital’s business model, investments need to be signed off by the board, which meant Girnun and his co-founder Daniel Moritz, needed to pitch to them in person, so that they could see their energy, passion and vision for Merchant Capital.

Serious, seasoned investors don’t make this easy. They need to see your passion, and how well you understand your business. They’re not there to make the experience easy.

“Even though I knew they were interested in my business, I still found the experience extremely daunting. There were very few introductions, handshakes or jokes. I was expected to launch into my pitch, and I knew that even though I had been given 20 minutes, the first two minutes would be the deciding factor. If I didn’t grab their attention in that time frame, they wouldn’t be investing in me and my business.”

Tapping into investor concerns

“I had just returned from the Endeavour international selection panel in San Francisco, and I think this played a major role in the success of my pitch,” says Girnun.

“One of my judges, a hugely successful venture capitalist from Sillicon Valley, really explained the significance of the elevator pitch to me. Imagine you’ve gotten into an elevator with the CEO of Goldman Sachs, he said. If you’re lucky, you’ve got seven floors to get them interested enough in your business to want your card, and maybe even a meeting. They can’t possibly learn everything about your business there and then — they just need enough for their interest to be piqued.

“Because you don’t know how much time you have, or who you’ll be talking to and what their area of expertise is, you can’t just learn a pitch off by heart, and you certainly shouldn’t have a power point deck that you rely on. Both are very bad ideas. Instead, you need to know your business so well, inside and out, that you can tailor your pitch to the person you’re talking to, based on what they care about.

“Because of this piece of advice, I was able to tailor the first two minutes of my pitch to the RMIH board and what they care about. If I grabbed their attention, I’d be able to hold it for the next 20 minutes, which actually ended up being close on two hours. If I hadn’t, we would have politely shaken hands after 20 minutes (if not earlier), and been on our way.”

It’s a simple, but incredibly important lesson: Know your business’s numbers inside out, and don’t try to bluff your way through any questions that relate to numbers.

“You have to know your unit economics — are you able to distill the essence of your business economics on the back of a napkin? You need to know the high level stuff and the minute details, and they all have to be at your fingertips. If they aren’t, you have no business trying to sell your company or attract investors.”

Related: Bootstrapping Is Much More Fun Than Investors

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Case Studies

How AutoTrader Anticipated Change

AutoTrader South Africa is an online behemoth, boasting more than three million visitors each month. Not that long ago, though, the brand faced the very real possibility of extinction.

GG van Rooyen




Vital Stats

  • Player: George Mienie
  • Company: AutoTrader South Africa
  • Established: 1992
  • Visit:

Key learnings

  • Trends are out there to be identified. Being caught unprepared is unacceptable.
  • Change needs to be tracked through the use of a measurable KPI.
  • Don’t be afraid to act pre-emptively.
  • Do research. Know your customer.
  • Create an unprecedented user experience.

By the mid-2000s, it was becoming clear that the world was changing. The internet was going mainstream, placing massive pressure on industries that only a few years earlier had seemed untouchable.

The print industry in particular was coming under threat, with readers moving to the internet for information. Things didn’t change overnight, though. The general decline in readership was steady but quite slow.

Like a frog sitting in a slowly-heated pot of water, it was all too easy to ignore the evidence. AutoTrader South Africa, however, was not willing to accept death by attrition.

Related: Fake It ‘Til You Make It: How These 10 Entrepreneurs Did Just That

Measuring change


“When it comes to the digital realm, you can never complain that some development impacted you unexpectedly. The writing is always on the wall, provided you’re taking notice,” says AutoTrader CEO George Mienie.

Long before the global shift to digital mediums started to affect AutoTrader in a real way, the company began to prepare for the inevitable.

“We knew it was coming. The shift to digital was already starting in places such as the US and Europe,” says Mienie.

“We also knew that we needed to measure this shift in a reliable way. When it comes to managing difficult change, you need a KPI that you can reliably measure.”

Comparing unique users of a website to the circulation of the magazine wasn’t reliable enough, since it was impossible to truly know how many people had used any given copy as a reference when shopping for a vehicle. Some other KPI was needed.

“We settled on leads to dealers. We wanted to track how many people had actually contacted vehicle dealers thanks to the magazine, versus how many had contacted a dealer because of the website,” says Mienie.

Finding a KPI

Tracking website leads and comparing them to magazine leads sounds like a simple idea, until you actually start to think about it. If it’s hard to know how many people used a single copy of AutoTrader as a reference, how do you figure out how many leads the mag has generated? It was a conundrum.

Tracking leads on the website would be easier, provided you were willing to harm the user-friendliness of the site. AutoTrader wasn’t willing to do this.

“We could track website leads by forcing every user to fill in some kind of form before gaining access to a dealer’s details, but we weren’t willing to do this,” says Mienie.

“Today, the average user spends a phenomenal amount of time on our site. A typical visit lasts 12 minutes, and we believe this is because our site is easy to use. While KPIs are important, they shouldn’t come at the expense of the user. Everything should be done to make the experience for the client or user as pleasant as possible.

“With this in mind, we give our software engineers a lot of freedom. They don’t need to seek permission to improve the site. If they’ve been working on something that they think will improve the website, they can run with it. You never want bureaucracy to stand in the way of improvement.”

Related: 11 SA Entrepreneurs on What They’ve Learnt About Managing Staff

An innovative solution


In order to effectively measure leads from both AutoTrader magazine and the website, the company came up with a very elegant solution called Call Tracker.

The solution was so elegant and transparent that even regular consumers of AutoTrader probably wouldn’t have noticed its existence.

How does it work? The number that you find for any given dealer in the AutoTrader magazine or on the website was not the same as the regular number of that dealer, although, the number was dedicated to a dealer.

Instead, it is a technology that redirected the call through the company to the dealer. Thus, giving AutoTrader the ability to measure leads via phone to the dealer, which was the most-used way in which consumers got in touch with dealers in those years.

Importantly, the company regularly placed a different number for specific dealers on the website and in the magazine, meaning AutoTrader could track exactly which platform a lead was generated from, and give the dealers useful insights into his/her dealership’s response.

AutoTrader had in essence created a reliable but simple KPI, using sophisticated technology at the time, that could be used to track consumers’ migration from print to digital.

The watershed

As mentioned, the migration of users was fairly slow. AutoTrader had started monitoring the trend in 2007, but it wasn’t until 2013 that the website took over from the magazine as the core focus of the business.

In the mid-2000s, the company had printed around 230 000 magazines each month, and managed to sell 55% of those on a regular basis.

Today, it sells about 30 000 magazines a month. However, as magazine sales have declined, the number of visitors to the website has skyrocketed, with more than three million visitors to the website every month, opening more than 40 million pages.

Related: 5 Wrongheaded Attitudes Stunting Your Growth As An Entrepreneur

New competition

The migration of AutoTrader magazine advertisers (sellers) and consumers (buyers) to the website wasn’t guaranteed. Getting buyers and sellers of the magazine to embrace the AutoTrader website required hard work.

“As a magazine, we had a big advantage: Potential competitors were faced with very high barriers to entry. We had the capability to compile a 600-page magazine, print it and distribute it weekly. Any new competitor would have found it hard to match us,” says Mienie. “The internet, however, obliterated those barriers. Suddenly it was much easier to compete with AutoTrader.”

AutoTrader wasn’t afraid to pre-empt the digital shift. “You need to be willing to eat yourself. One of the things we did was to place the website prominently in the magazine, knowing that it would eat into sales. We had to take a short-term hit, but we knew that we would benefit from it in the long term.” The company also placed a huge emphasis on the user experience.

“You need to be the best,” says Mienie. “You need to lead the charge and be first to market with every new development. You also need to know and respect your consumer and dealer. We believe in creating a site that is easy to use and offers more content than you’ll find anywhere else. We also make it a priority to know the consumer’s car-buying journey and car sellers’ needs.

“But, the game is changing again, fewer and fewer consumers are using the phone, and to an even lesser degree email, to get in touch with dealers. Our research over the last year shows that more than 52% of car-buying consumers don’t phone or email a car dealer, but simply take the address and visit the dealer directly.

“When it comes to managing great change within a company, research is incredibly important. But just doing research isn’t enough you need to use it effectively. The temptation exists to hog research because you don’t want competitors to get hold of it. That doesn’t work. We know exactly how much time the average consumer spends studying vehicles before buying a new car. We also know how much of that time is spent online (15 hours), and how much is spent in the physical world visiting dealers (14 hours), and this trend is shifting rapidly toward less time in the physical world and more time searching online, which means the consumer has pretty much made his choice before he leaves his screen. We give that info to our salespeople, who in turn give it to our clients (car sellers). Information needs to be disseminated.”

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