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Starting & Thriving in E-commerce in South Africa: The Foundations

Mac Minds Insights | Mac Consulting

The COVID-19 pandemic has transformed our lives in a number of drastic ways. While some big corporations struggled to remain relevant in the shape-shifting business climate around them, many start-ups have found their time to shine and are performing remarkably well.

Some larger companies who have had innovative plans on the backburner prior to the pandemic have had to adapt to this virtual world of e-commerce at an accelerated pace where customers were working from home, in need of new services and buying goods online. One such example is Woolworths, when, as a result of an increase in demand for new delivery slots, was able to roll out a “Click and Collect” option within three weeks although the idea had been envisioned long before our March lockdown. While many large companies, much like Woolworths, have put their previously delayed ideas into action, there is just something about the touch of a start-up that appeals to customers today.

Smaller start-ups were able to seize the opportunity provided by lockdown measures, and have opened the doors for start-ups in the future. Whether they opened their doors, both virtual or physical, a few years before the outbreak of the pandemic in 2020 or in the midst of the chaos that ensued, they knew that opportunities needed to be seized quickly. They also had the advantage of starting businesses where they could be hands-on with their customers and learn as they grew. As many successful start-ups usually possess, they had customer centricity at the front of their minds, which some larger businesses struggle to achieve as a result of their size and complexity.

But how did they do it? And what can be learnt about their strategies that could aid companies, big and small, in successfully launching new digital businesses?

Over the next three articles, we will be sharing the stories and insights of people who have been part of the start-up movement, as well as investigating the trends that are dominating the e-commerce industry. We start with a few insights from Daliso Ngoma, the Managing Director of African Technopreneurs, and he outlined to us what foundations you need to get right before you launch your new e-commerce business:

  1. Identifying your niche: What market will you be entering? What gaps are present in that market and how you can fill the gap in that market and achieve a competitive advantage?
  2. Know the platform on which you will be selling: What to consider when purchasing a website hosting service best suited to your capabilities and customer’s needs.
  3. Set your delivery strategy up for success: What types of delivery options are available and why offering multiple delivery options to your customer might save you money in the long-term.
  4. Reach your audience: How you can reach you audience across multiple channels and why a selection of different content is the best bet for establishing your business to your potential customers

Tip number 1: Identifying your niche

This may seem like a simple task, but its significance must be respected. What do people want/need? What can you provide? Would they be willing to pay for that product/service? And if so, how much would they be willing to pay for that? Through extensive market research, you need to become an expert in the market you will be coming into and understand the competition that you will soon face.

To best understand your market, you need to distinguish between the Total Addressable Market (TAM) and the Serviceable Available Market (SAM). As explained by the Larta Institute in greater detail, the TAM is the total market for your product, while the SAM is the portion of the market that you can acquire. Daliso points out that if you are expected to enter a saturated market, you will know that the product/service being sold there is viable and that your TAM is quite large, however, it does not mean that the product/service would be simpler to sell. While positioning yourself to be competitive in terms of price may be the best option if your product is generally low value, value-based offerings still carry weight no matter what you are selling to your customer.

You will need to identify a gap in the market and seize your opportunity. One such business that did just that was Native Nylon, an inclusive fashion e-commerce brand that claims to bridge the gap between affordability and luxury for South African women. Portia Dhlamini, the Founding Partner and CEO of Native Nylon launched the business in November 2020 in the midst of the COVID-19 pandemic after managing to secure funding from a microfinancing private equity fund, Khula Lula. She saw an opportunity to embrace the movement toward convenience and appeal to a market that is sometimes left behind in the women’s fashion industry: the tight-on-cash women who do their shopping online and who do not want to sacrifice quality for affordability.

Tip number 2: Know the platform on which you will be selling

The second important aspect for you to consider, according to Daliso, is the platform will you be selling your products/services on. You will need to purchase a website hosting service that is quick, caters to your coding experience and where your customer will get what they want in the fastest way possible. This is a very important decision for your business, as Google will typically boost the ranking of your site if it is fast and easy to navigate.

There are numerous options for developing and custom designing such a platform, including:

  • Installing WooCommerce – the e-commerce plugin for WordPress. WooCommerce is a plugin to the content management system WordPress, which allows you to customise the costs involved with creating products, processing orders, and analysing key statistics. Many popular businesses use this plugin, including Clickbank, one of the world’s top ranking e-commerce sites. While WooCommerce is a cost-effective way to run your online store, it does require its user to have some coding knowledge to gain the most from its services.
  • Utilising Shopify, which is relatively easy to use and, in contrast to WooCommerce, requires less coding experience to gain the most from the monthly premium costs. You are able to customise themes, products, discounts, checkouts, and payments.
  • Signing your business up with super apps, such as Nedbank Avo. The Nedbank Avo app provides merchants with an integrated solution to taking their businesses digital. By taking care of your content management, logistics, marketing and payment systems.

Overall, the importance of the platform on which you will be selling your products and services cannot be underestimated. Whether you utilise plugins, software or apps to make your customers happy, make sure you know that you are providing them with the best, easiest to use platform that represents your brand.

Tip number 3: Set your delivery strategy up for success

The third tip provided by Daliso references setting your delivery strategy up for success, meaning that you need to use a service provider, or service providers, that align with your business strategy and goals. Customers want to know that they will receive what they ordered, where they stipulated to have it fulfilled, and when you indicated it can be fulfilled. They care about cost-efficiency, quality and, overall, maintaining their trust in your business.

The safest bet for all companies to deliver on their promise to their customer, whether you are big or small, is to offer multiple delivery options. Give customers options (for example, overnight, same-day, locker collection etc.) so they have more freedom regarding how to best receive the item/s they have purchased. You can also save money by using multiple carriers due to the fact that in the back-end, you can send the purchase to the most cost-effective delivery partner in your vendor/service provider list.

When looking for delivery options, you might come across the likes of Courier Guy, Aramex, uAfrica and MDS Collivery. One start-up who utilisies multiple delivery partners is 180by2, which is a VR, AR, XR, and 360 camera company, who partners with the likes of The Courier Guy, Dawn Wing and Courier IT. Many providers have different offerings, including same-day delivery, next day delivery and road freight express; you will need to make a call on which options best suit your customer and your brand. In addition, you will need to consider whether you can solely integrate with a partner via API’s (application programming interface) or if WhatsApp and e-mail communications will suffice and what the pros and cons of these options to your way of working would be.

Tip number 4: Reach your audience

Generating a strong marketing presence for an online store is often overlooked, however, as Daliso stresses, it remains critical to generating traffic to your website. While the ease of online shopping is attractive, one must understand that customers will be less likely to ‘stumble across’ your website the same way customers walk through a mall or down a street and stumble upon a physical store.

As a result, visibility for an online store requires presence across multiple channels and affiliate referrals. You can use, for example, Google Shopping and Google Ads to reach a larger audience and email marketing to directly reach those who might be interested. When engaging in email campaigns, you would likely want to adopt content that is personal and engaging, where the customer is guided by you to your store. This content could include a welcome series where you introduce new customers to the business and encourage them to purchase; an automatic reminder when a visitor has not completed their purchase; or triggered emails that send personalised messages such as birthdays and anniversaries.

Another key component is social media marketing, where you can target your audience in places where they feel relaxed and open to consume media. This could mean working with influencers, placing Facebook ads and even Instagram promotions. An example of reaching your target audience where they feel open to consume media is Native Nylon, who utilise the Instagram Live feature to chat directly to their audience and answer any questions in a conversational way. Through this, Native Nylon got to really understand the things that matter to their customers and what they expect Native Nylon to deliver.

All in all, you will need to figure out what levers exist that can make it easier for you to grow your sales and deliver the best to your customers.

The biggest thing you will need to do is START, JUST START. You cannot try build Rome in a day, instead, you need to build just enough for the customer to begin extracting value as early as possible, then, based on their feedback, you iterate and evolve your offering for better customer satisfaction whilst correctly using limited resources such as finances.

A lesson that successful start-ups get right very early on is having a customer-centric approach and building a business that exists to make the customer’s life easier as opposed to the other way round. We believe large incumbents can adopt the same approach to doing business in order to gain more traction.

The essence of a successful business is a ‘learning business’, and the business is nothing but the summation of its people, so the people ought to have a learning culture. Explore the market demands, solve the technical considerations to taking your business digital, setup a logistical strategy and lastly, reach your audience.

In the next article, we will discuss the value in offering a compelling customer experience.

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