How To Start an E-Commerce Business In South Africa (Complete Guide)

South Africa’s business landscape is changing, and many sellers are looking for new ways to sell their goods and services online. Thanks to easy website design (no coding required), accessible pay-gates such as PayFast and PayPal, as well as numerous delivery options within South Africa, e-commerce is booming.

In this article, we’ll walk you through an overview of common e-commerce models, explore the available e-commerce platforms and gateways for South African businesses, peruse a list of couriers for product delivery, and look at ways in which you can market your e-commerce business both online and offline. Bookmark this page and return to it whenever you need to, or reach out to us directly for help.

Let’s dive in.

WHAT IS E-COMMERCE?

E-commerce is the practice of buying and selling physical and digital goods and services online. An e-commerce business requires a website to sell the goods from, as well as some sort of order fulfilment to get the product to the customer (if it’s a physical good).

As of 2019, e-commerce was worth an estimated USD 4.2 trillion a year — and growing. The market is only going to get bigger as more merchants come onto the scene, more transactions happen online, and more business owners see the benefits of running an online business at scale with limited overhead.

But how can you start an e-commerce business in South Africa? Let’s explore some common e-commerce business models next.

LIST OF E-COMMERCE BUSINESS MODELS

There are several e-commerce business models you can explore for your online business. They include:

1. Dropshipping
2. Wholesaling and warehousing
3. White label products, and
4. Private label manufacturing

Let’s look at each of these in turn.

1.     Dropshipping

Dropshipping involves setting up an online store with goods from different merchants. You then route all orders to the correct sellers for delivery, and your profit comes from adding your mark-up to each product’s price. The benefits of dropshipping are that it’s easy to set up, you don’t need to hold any stock, and you can tap into an existing niche with a sizable market.

The drawbacks of dropshipping are that you have no control over the delivery process, the product’s quality or its marketing. Most importantly, you have no moat — no unique value proposition that differentiates you from your competitors. This means that someone else can start up a dropshipping website within your niche, serve the same pool of customers as you, and eat into your market share by charging a lower mark-up on their products.

Dropshipping is easy to start, requires minimal management, and can earn you a tidy profit.

2.     Wholesaling and warehousing

Wholesaling and warehousing require you to buy lots of stock, find storage for it, and track both your inventory and customers’ orders for delivery. It can be quite capital-intensive, and the margins on this business model really only make financial sense at scale. The focus with wholesaling and warehousing is on pushing volume to sell as many products as possible and recoup your costs.

3.     White label products

White labelling involves taking a product made by a third party, slapping your own label onto it, and adding a mark-up to the price. You’ll ned a certain level of inventory called a “minimum order quantity” (MOQ) to qualify for wholesale prices from the original manufacturer, which can be capital intensive. White-labelling gives you control over the product’s branding and marketing, inventory levels, and distribution. However, it doesn’t give you control over the actual product’s quality.

4.     Private label manufacturing

As the name suggests, private-label manufacturing involves you creating, marketing, and distributing your own product from start to finish. You have complete control of the product’s look and feel, it’s marketing and distribution, inventory levels, your customer database, as well the quality of the product itself. If you have a compelling USP, private label manufacturing also provides a deep moat that can’t be easily crossed by your competitors. While private label manufacturing offers long term growth opportunities, it is the most capital- and time-intensive e-commerce business model of all.

The right model for you will depend on how much time, money, and effort you’re willing to put into setting up your own e-commerce business.

BEST E-COMMERCE PLATFORMS FOR SOUTH AFRICA

There are three main e-commerce platforms that are best-suited to business owners in South Africa:

• Shopify
• Yaga
• WooCommerce + WordPress

Let’s explore each of these in turn.

1.     Shopify

Shopify makes it easy to set up an online business and start selling right away. Shopify now powers over one million businesses, and the platform allows you to create great-looking, fast-loading websites to showcase and sell your products and services. With plenty of themes to choose from, Shopify integrates inventory management, web design, sales and marketing, and order fulfilment all in one. You can create marketing campaigns linked to Facebook, Instagram and email newsletters to drive more traffic and sales. Shopify also offers a 14-day free trial and monthly contracts that you can cancel at any time.

2.     Yaga

Yaga is a South African e-commerce platform that lets businesses list their products and prices and get paid through the platform. After a buyer completes the check-out process, the money is paid into Yaga’s account and the seller delivers the goods to their destination. Once the buyer confirms receipt of the products, the money is then released into the seller’s account. Yaga currently hosts business in different niches such as fashion and crafts.

3.     WooCommerce + WordPress

WooCommerce (WC for short) is an e-commerce plugin that lets business owners sell their products and services on their own WordPress websites. You can sell physical and digital products, event tickets, bookings and consultations, rooms (in accommodation or corporate spaces), and more. Inventory is managed on the backend of the seller’s WordPress dashboard, and the seller can set their own prices, taxes, shipping and delivery options, payment gateways, and more. WooCommerce also offers an extensive library of plugins that unlock new features or enhance the functionality of your online store.

All in all, your choice of platform will ultimately depend on your budget, web design ability, and the amount of time you’re willing to spend learning about your preferred platform and setting up your store.

E-COMMERCE PAYMENT GATEWAYS IN SOUTH AFRICA – WHICH ONE TO USE?

E-commerce payment gateways in South Africa are limited to just three providers at the moment. These include PayFast, PayPal (for those with FNB accounts), and DPO/PayGate (from just R99/mo). PayFast lets you receive cash via EFT (linked to the buyer’s mobile app), as well as a credit/debit card.

PayPal lets users from around the world pay into your PayPal account from theirs, which you can then withdraw to your bank. DPO offers a payment gateway integration that lets you receive credit and debit card payments from your customers. All three payment gateways charge a small fee for each transaction (usually 2.9% plus 30c). They may also need you to have a registered company.

Ultimately, the more payment options you offer your customers, the more ways you can get paid.

BEST COURIERS TO USE IN SOUTH AFRICA

There are plenty of delivery options for e-commerce sellers in South Africa. These include:

• DHL
• Aramex
• Postnet
• Fastway
• Courier It
• Globeflight
• Dawn Wing
• Door 2 Door
• City Logistics
• The Courier Guy
• RAM Hand to Hand Couriers

Each of these businesses has a different pricing system for package deliveries both within and outside the country, so click on the links above to check out their websites for more information.

HOW TO MARKET YOUR E-COMMERCE BUSINESS IN SOUTH AFRICA

There are many ways to market your e-commerce business in South Africa. In this section, we’ll explore the following eight ways:

1. Social media and PPC advertising
2. Retargeting ads
3. SEO
4. Email marketing
5. Content marketing
6. Product reviews
7. Partnerships
8. Events and sponsorships

Let’s look at each of these in turn.

1. Social media and PPC advertising

The most common method of advertising your online store is via social media. You create content and run ads to reach new audiences and drive traffic to your e-commerce website. You can also leverage Pay-Per-Click advertising (PPC) to drive traffic from search results to your landing page.

2. Retargeting ads

Customers don’t always buy your products after browsing your online store. However, you can still reach these customers with retargeting ads that show them the products on other platforms they may frequent. Setting up retargeting ads requires the use of tracking cookies (sometimes called “pixels”) which you can obtain from your admin back-end on sites such as Facebook Business Manager. Retargeting may be a great way to salvage sales and turn abandoned carts into profitable conversions.

3. SEO

SEO (search engine optimization) plays a large role in whether your website gets discovered organically in search engine results. As such, ensure you have a fast-loading, well-optimized website for the search engine robots to crawl through. Get a free website audit using Nibbler to see what enhancements you can make to your website.

4. Email marketing

Email marketing allows you to create a direct, ongoing relationship with your customers by sending them valuable content and alerting them to new sales and promotions. Drive sign-ups to your email list by offering discount vouchers, as well as by adding a pop-up to your website. Use a platform like Mailchimp to set up your next email marketing campaign.

5. Content marketing

Content marketing means creating relevant, helpful content around the good and services you sell. This content can be in the form of blog posts, podcast episodes, videos, and graphics that are then posted to your website and social media channels. If you sell vintage clothing, for example, you can write an article titled “Top 10 Vintage Summer Looks” and link each look to a set of products in your store.

For great content, agencies like Grammar & Flow offer affordable content marketing packages to help your brand shine across social media. At Mo Shé Media, we also assist brands with social media channel setups and advertising campaigns. Reach out to us today for a quote.

6. Product reviews

Product reviews are a great way to drum up organic interest in your products from authentic people. Micro and macro-influencers can be great sources of organic traffic, and having an arrangement with them (e.g. free product samples in exchange for a review) can boost your bottom line. Reach out to your favourite influencers on social media to get started!

7. Partnerships

Another way to market your online store is to form partnerships with key players in your industry such as journalists, bloggers, and affiliate marketers to generate some buzz about your brand. Podcast sponsorships are another great way to inject your brand into engaging conversations around the country. Check out this list of the top 10 podcasts in South Africa.

8. Events and sponsorships

Hosting or sponsoring events related to your brand can be a great way to drive website traffic and sales. If you sell sporting kits, for example, you might consider sponsoring a sports tournament in your local community with your store’s URL displayed prominently on all marketing collateral. You can also place ads in print publications within your niche that are tailored to your audience.

CONCLUSION

Starting an e-commerce website in South Africa is a great way to leverage the growing volume of online transactions taking place in the country. By selecting the right business model, setting up your store on the right platforms, and offering a plethora of payment options, you too can begin marketing and selling your goods and services today. For more customized help or e-commerce consultation, reach out to us today.