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Ecommerce in South Africa is new and exciting. Even though we have had an online market for over a decade, more and more people are finding opportunities within the digital space. With technology and mobile payment progressing the market is still new. There are niche stores, food stores, mass stores, and even retail stores looking at the online game.
The cold hard truth about ecommerce is that it does not consist of installing a website, sitting back and watching the money roll in. That is a misconception and one that needs to be squashed. Starting your own store in cyberspace requires a lot of planning, thought, and guts. You are entering a market where no one knows you’re there.
I’ll be covering five important factors you need to consider when looking to start an online store. Each of these is a necessity and not something you should be glossing over.
Choose the platform and hosting package that’s right for you
At the core of an online store is the platform itself. The store front is what potential customers will see when visiting your website. Websites can be skinned to look like anything, but the functionality, responsiveness, and even search engine are what sets you apart.
As a potential ecommerce store owner, you may want to have someone create a new website for you, or opt for an already made off-the-shelf solution. A pre-built solution is ideal for someone with less than 50 000 products or wanting to have a store up and running as soon as possible. It is recommended you look into having the platform custom built when managing more than 50 000 products or so, such as running an import business.
There are a number of off-the-shelf platforms you can select from and we will be covering some of them over the coming weeks. In order to have a faster, cheaper solution look at running a store built on PHP and MySQL – most free solutions are already built around the technology.
Some of the more prominent solutions are OpenCart, Magento, Woo Commerce (recently purchased by Automattic), and Shopify. The first three mentioned will require a paid-for website host. Your solution may run on a cheap (say R30 per month) shared host, but you’ll still need a cloud or dedicated server. It is recommended you start looking at one of these larger hosts from the beginning to avoid issues down the line. The latter is hosted on Shopify’s servers.
Order products from different local stores and single out what works best. Make sure to note all of these features and start looking for the most important ones. Some systems, such as responsive wishlists, aren’t built into the basic software and you’ll have to commission. Remember, a store like Takealot wasn’t built in a day and they have a team of developers. It’s okay to start small and expand from there. Don’t approach a developer saying you want Takealot, and can only pay them in peanuts.
Once you’ve done your research on software, and what modules are available for it, make sure everything is kept up to date, or hire someone to do so for you. The last thing a store owner needs is some hacker exploiting a vulnerability in your store.
Delivery and warehousing infrastructure
South Africa is a fairly large country. And our urban areas consist of several large cities and many smaller towns scattered throughout the provinces. In recent years delivering your customer’s product has become fairly easy, such as Pick n Pay’s Aramex overnight bags. Most courier companies offer same day, overnight, and road freight as standard delivery options, but all of these services come at a steep cost. It’s your job to decided how courier pricing is allocated or absorbed.
It has become a common misconception all South Africans want free delivery and if you don’t offer it your store is doomed. In a recent interview with Raru’s Director, Waine Smith, he states this isn’t necessarily the case. If you’d like to offer free, or discounted delivery, the pricing will have to be absorbed somewhere. Does your product contain enough margin to absorb the cost? How much will it cost you to ship your item to another city? How long will it take to ship that item if you cover the cost, or if your courier does? Too many times I’ve dealt with business owners wanting to offer the service, but staying oblivious to the financial numbers involved.
Larger courier companies have better internal systems and infrastructure, but due to their size you may be lost in the void. Give the smaller courier companies a chance. Run tests with every courier you are considering and if possible every delivery service you’ll be offering. See how your parcel is treated and make sure to get feedback from whoever is receiving the parcel. Try not to settle for a single courier company and make sure you have at least two as backups.
Have you decided where your parcel will be shipping from? Are you looking at having your own warehouse, warehousing with someone else, or shipping directly from the supplier to the customer? Warehousing yourself allows you complete control over you stock, exact packaging, and can put you in a better position to manage all inventory. This option isn’t for everyone.
If you’re juggling too many hats within the company then outsourcing your warehousing may be ideal. Companies, such as Parcel Ninja, will manage your product inventory, help you find couriers, and package items to be shipped out. Of course, it’ll come as an additional price to tack onto your products.
It’s almost never recommended to ship items directly from the supplier to the customer. Problems may arise, which could tarnish your own name. Some of the examples I’ve faced are accidentally including your own invoice, late delivery, or not supplying a tracking number. This in no way accounts for all suppliers, but keeping a closer eye on your inventory and deliveries will benefit you in the long run.
Where does your stock come from?
Whether you choose to deal with local or international suppliers, there are numerous pro and cons to each one. This next part may seem harsh on both, but it’s a critical look at how each one functions.
The majority of local supplier will gladly deal with you when approached, but there are some you’ll need to be approved with first. For example, a supplier may ask you to place a minimum order before opening an account, or decided if your store meets their criteria. These suppliers are either looking out for their brand or vetting frauds. Their practices may be harsh, but remember you don’t have to order from them if you’re not comfortable.
Their stock holding may not be as large as international counterparts, which is understandable given our economy and strength of the Rand. Special request items are usually imported at high costs from these supplier. Most stock ordered will be delivered to you within a week. It’s usually easier to deal with local suppliers when it comes to accounting and prices.
International suppliers have a higher stock holding, rarer items, and cheaper prices, though the last point can change depending on the rate of exchange. Someone looking to start up an ecommerce store importing products has to have the addition of being VAT registered, acquiring an import code, and securing a decent clearing agent. The last point can usually be done through most large courier companies.
Imported products may be considered grey or warranty void if there is already a local supplier. It’s best to check on these point before hand to avoid any unnecessary problems with stock.
Payment gateways and Security
Customers have trust issues with online payment systems, and it’s that lack of confidence you’ll need to overcome. Firstly, make sure you install an SSL certificate on your server, or ask your hosting company to do so. These will cost you a bit each year — depending on the type – but help with encryption and showing a potential customer your website is secure.
Next, you’ll need to choose a payment platform that is right for you. Each one offers different features. For example, PayFast allows you to accept Bitcoin, Instant EFT, and uKash among their other offerings. With MyGate you can enable recurring billing and charge for subscription services.
There are a number of different payment gateway systems. One thing is for certain: always have an EFT / bank transfer option. Not only are the fees on these systems significantly lower than credit cards, but you will have access to the amount as soon as it clears.
Apart from credit card facilities you’ll more than likely need a EFT/Bank Deposit payment option. For most stores a single bank account will be enough, but larger ones looking to process payment faster should look at having an account with each bank. If this is too much hassle, places, such as PayFast, include an Instant EFT system. A customer will pay into a PayFast bank account of their choice, with a specific reference, and it’ll still reflect that day.
Put anti-fraud measurements in place and stick to your guns with them. Customers will often understand when you explain the systems to them and why they are there. These systems will protect you and the customer.
Marketing. Marketing. Marketing. Be the person you want to deal with.
If you build an online store your customer won’t find you. It’s as simple as that. You can’t rely on foot traffic in a busy location because there is nothing like that. The way around this is, of course, is marketing. There are a number of options available, but the main contenders are Facebook, Twitter, and Google AdWords. Each of these has their own pros and cons, but I won’t go in-depth with them here.
A key component for online marketing is a loyal following. Create an online presence customers enjoy interacting with, make sure what you say is unique, and try to answer any queries in a timely manner. Once you have a few loyal followers they’ll tell others of your store and so it goes. This way of marketing is almost entirely free, but hiring a dedicated social media manager may be the best solution for you.
Don’t push every tweet or Facebook post with a product link to your website. Try varying these entries with original contents, news related to your items, and competitions — don’t only run competitions on your social media platforms or you’ll attract the wrong kind of customer.
A more non-traditional way of marketing for ecommerce is attending events or setting them up. Try to attend any trade shows you can which relate to your product offerings. Hand out business cards and flyers. This may sound very “old school” but it does work and gives you a hands-on approach with customers.
If you’re going to be dealing with your company’s social media presence then make sure you’re a real person. Yes, that may sound strange, but let me explain. How many times have you received a copy and paste answer to a question? How often does a store not care about your query? Don’t be that person. Don’t be that company. Make sure the customer knows you’re willing to deal with them. Stand out from the crowd and make sure people want to keep coming back to you, even if it’s just to say hello. Stock standard replies are perfectly acceptable for order or shipping confirmations, but not when a customer needs to know the warranty on an item, or what times you’re open.
You will face customers you don’t want to deal with at all. Some of these people will try to haggle, say the product is cheaper on another store, or demand free items. Yes, all of this happens. Always be as polite as possible to these individuals and let them go if you need to. It’s okay to turn away business if it won’t benefit you in the long run, but that usually falls into the most extreme of cases. This still falls under marketing: good customers will recommend you. Bad customers will ignore you.
From next week, I’ll start looking at different ecommerce platforms in which I’ll look at their pros and cons. This new segment will start with OpenCart. If there is a system you’d like me to look at, please leave a comment below and I’ll try feature that system.
Social media image by mkhmarketing via Flickr