Do you want to start a business that does not require hefty capital and resources? Are you looking for a modern business that is easy to manage and does not require a lot of logistics? If so, dropshipping might be the one you are looking for. In this article, our editors round up the steps how to start a dropshipping business in South Africa!
There are lots of factors to consider if you want to make your business more profitable and successful. First of all, you need a product to sell (may it be a physical item or a service). Aside from that, it is necessary to analyze the competition, survey your target audience, set the appropriate pricing, and do many more things. The mentioned are only a few, but there are a lot of other factors. In addition to these, you have to do everything in the right amount for your business’ success.
In this article, our editors try to water down the concept of a dropshipping business to help aspiring entrepreneurs build their dreams. But before anything else, it is crucial to know what exactly dropshipping is? Possessing the appropriate knowledge about this industry will help you overcome adversities, mitigate risks, and save time and money.
What is Dropshipping?
Dropshipping is a business model wherein a store (you) fulfills orders from customers directly from a third-party supplier. When an order comes in, the store buys the product/s from the supplier, who will then send it directly to the customer. In this way, the store does not need to handle the product in any way. You, as the store, only as the middleman.
Advantages vs. Traditional Online Businesses
Comparing this to traditional online business, dropshipping has the unquestionable edge for multitudes of reasons. Such reasons are the following:
- Less demanding inventory management, which means not everyone is comfortable and adept at doing
- No need for a physical space for products (for instance, a warehouse)
- Fewer business costs due to the elimination of the need for a warehouse
- The sole entrepreneur (who owns the store) can focus on more critical business aspects such as advertising
- Shipping products to the customer is the responsibility of the third-party supplier
Dropshipping versus Affiliate Marketing
If you know the methods on how to make money online, I am 100% sure that you know or have heard of affiliate marketing. And if you look at these two on a macro scale, dropshipping and affiliate marketing are similar. However, there are some key differences that an aspiring entrepreneur should know.
While both businesses essentially sell products from other businesses, only dropshipping allows entrepreneurs to manipulate their prices. You decide whether you want the margins to be wide or not. However, be cautious slapping high margins on your products; customers may stay away from your product if they cost a lot. Moreover, they may find shops with better prices elsewhere, like Amazon.
On the other hand, affiliate marketing does not let you jack up the prices for a large profit. You receive a fixed commission for every product sold. Moreover, commissions vary from product to product (some as low as 3%). Therefore, to earn more money with affiliate marketing, you just have to sell more products.
If you are wondering whether dropshipping is profitable, we can confirm that it indeed is. As the dropshipping business model gets more popular, there are more platforms aside from AliExpress to choose from. As a result, the barrier for entry is low, which makes dropshipping one of the best ways to enter the e-commerce market.
Here are the things you need to know why dropshipping business results in the potential earnings:
- The dropshipping industry’s yearly increase in profit is astounding. It already reached $4 BILLION, which is an increase of 7 percent a year.
- Its increase continues to increase as seen over the last 10 years.
- Even small retailers have considerable success thanks to the 30% conversion rate through smartphones
Apart from all these, dropshipping customer-first ideology makes it easier for prospects (a.k.a. the customers) to trust these businesses more than corporate businesses.
How to Start a Dropshipping business in South Africa?
Dropshipping is the most famous and profitable online business in South Africa. If you plan to start a dropshipping business, then South Africa is a great place to start. After all, it is flourishing and one of the largest marketplaces. Do you wonder why South Africa is famous in dropshipping business? Well, South Africa is the gateway to the rest of Africa. Therefore, this will pave a great way for drop shippers who want to start a business in South Africa.
Also, running a dropshipping business in South Africa is considered a risk-free zone as you do not have to pay any additional cost to hold the inventory and shipping products. The best thing is that you will get more time to concentrate on your business.
Before you get to know how to start a dropshipping business, you need to familiarise yourself with why starting a dropshipping business in South Africa is a great idea;
- As time moves on, the e-commerce market in South Africa keeps evolving. It is a no-brainer because it is the perfect place to start an online business.
- South Africa has seen an improvement in its internet connection. More people connected to the internet equals more customers.
- Globally trusted payment gateways like PayPal and 2CheckOut are available in South Africa. Thus, paying is easy and convenient. Using these payment methods will certainly boost your conversion rate.
- South Africa has an exciting social and cultural environment. Opening a store catering to this country will help you discover new audiences.
Now that you know the why’s, we will discuss how to start a dropshipping business in South Africa:
Conduct research on the market
As with any other business model, this step is crucial to your shop’s success. Like mentioned earlier, South Africa has a different audience also with different preferences. Therefore, you need to know what type of products you are going to sell and the type of customers you are going to target. Your success is based on how far it can reach and the quality it brings to people.
So, you need to come with different ideas and need to validate those ideas.
Find out the products and suppliers
After thorough research of the market, you need to decide what kinds of products you are going to sell. Your product should be strictly based on what you found about the market. Then, the next priority is finding the manufacturer or suppliers. To find the best supplier, you need to account for the expenses and delivery time.
The most common suppliers are from China. However, delivery times can be slow as a turtle. It may take weeks before the product arrives at your customer. This is a big NO! This long delivery time can force your customers to cancel their orders. You do not want that to happen, do you?
One of the best ways to prevent this from happening is to find a local supplier. Try to connect with local businesses. Doing so will let you learn more about the local scene, and it will serve as knowledge for future projects. To be profitable in the long term, you need to provide unique ideas and explore more ideas.
Create an e-commerce store
Another crucial step is creating the store itself. This store serves as your gateway to your customers. Moreover, it will help you reach customers even globally. Make sure that the website looks fresh, professional, and trustworthy. If you marked all these boxes, a high conversion rate is inevitable. This website will serve as the primary medium of purchasing products from you.
There are various ways available to build a website, but the simplest platforms are WordPress and Shopify. If you do not have the technical know-how, you can hire someone to do it for you. There are a lot of places you can visit for this one, such as Upwork or Fiverr.
Link a payment gateway
Technically, the most crucial step is to link a payment gateway. You cannot start an online business without this step. Your chosen payment gateway can affect your conversion rate. One of the most popular gateways is Payfast. Here is a link to their website.
If you are selling products outside the borders of South Africa, then you can use PayPal. You can check out other payment options like Stripe or 2CheckOut.
Advertise to your target audience
Advertising is one of the oldest marketing strategies. Until this day, we are still using this strategy to reach out to our target audiences. Additionally, doing advertising can help your business grow faster. If you are new to this strategy, advertising platforms are available, like Google Ads, Facebook, Instagram, etc. Take note that some of these require a steep learning curve, such as Facebook and Google Ads.
Again, advertising on these platforms requires proper research. Use these platforms to target the right people that will buy your products. Once you calibrate the strategy right, your store will become profitable.
Just focus on what you want to sell primarily. It will help you to find your identity in the market. Furthermore, it will build the reputation of your business.
Provide an excellent after-sale customer service
Any product-selling business has after-sale customer service. But what separates the successful ones from the rest is the quality of their customer service. Efficient customer service should be in your priorities, or else it will affect your business badly.
If your business provides happy customer service, people will likely spend more money and time on your product. Moreover, you can gain loyal customers and retain them. Most drop shippers ignore this to make quick money.
Before we end this article, our editors gathered some of the best success stories of people finding success in their respective dropshipping businesses.
- Planet54 is considered the number one drop shipper in South Africa. They are especially great at selling cloth accessories. They have more than 7000 products, and it is considered one of the exclusive dropshipping suppliers. From Africa to South Africa the company is selling products to more than 100 online stores.
- Next in the list, we have Third-wave distribution who sells electronic products. The business has more than 25 brands, and it consists of 400 different products. They are offering cutting-edge products and brands that have not found their way to African shores.
- Calasca is one of the best dropshipping suppliers in South Africa that consists of more than 1000 products. Here, you will get all kinds of products starting from kitchenware, toys, pet, luggage, beauty parlor, etc. You can also join their reseller program if you are interested.
Now, it should be clear that South Africa is a great market to start a dropshipping business. It has a lot of potentials as it is the go-to entry point to the African market. A last piece of advice, dropshipping is not a get-rich-quick scheme. It requires a lot from you – time, money, and hard work. As more and more businesses are going online, it is better to get on the trend train now before it is too late.