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As the African business landscape continues to evolve, driven by factors such as the growing digital economy and shifting consumer demands, companies across the continent are faced with the imperative to adapt or expand their operations. Recent studies indicate that embracing digital transformation and enhancing the customer experience can significantly boost revenue and competitiveness in this changing environment.
According to a study by Gartner, 89% of board directors in the United States are contemplating the integration of digital strategies into their revenue growth plans. Simultaneously, research has shown that aligning with evolving consumer demands and providing exceptional customer experiences can increase business revenue by 4% to 8% above market averages.
SMMEs, business owners, and leaders must now ask themselves if they are prepared to make the necessary adjustments to thrive in this dynamic landscape.
Tech as the competitive edge
Staying competitive in today’s business environment requires constant innovation, especially in the technology sector, to keep pace with market trends and changing consumer preferences. Industries like car insurance illustrate this point vividly, as technological innovations have become the driving force behind competitive differentiation.
“With the influx of information and choices available to the modern customer, insurers have to leverage tech to meet their customer’s needs and constantly keep upgrading their products,” says Keletso Mpisane, head of digitally-based motor insurer MiWay Blink.
Mpisane emphasises that staying competitive in industries like insurance necessitates regular reviews and updates to stay ahead.
Pivoting to e-commerce
Many businesses, particularly retailers, are exploring new markets to overcome the challenges of operating in regions like South Africa. Joel Bronkowski, country lead for South Africa at financial technology firm Paystack, explains that e-commerce offers an avenue for expansion without the need for physical stores, reducing overhead costs while potentially reaching global customers.
“E-commerce affords them the ability to do so without having to set up physical stores. That, in turn, means that they can sell products at greater volumes without drastically increasing their overhead costs,” says Bronkowski.
One notable example is the transformation of South African farmer Rick Hein’s business. Initially supplying microgreens to local establishments, Hein expanded his reach through e-commerce and customer deliveries. His business, MicroThumbs, now offers a range of microgreens products and has grown to 28 farms across South Africa.
“When we started out in 2019, we only sold microgreens to restaurants and individuals wanting orders of microgreens. But as interest in the product grew, our vision became one that would have microgreens accessible to every household in the country,” says Hein, managing director of MicroThumbs.
Hein decided to package the powerful health benefits of microgreens into a product range that includes infused pestos and green powders, now available at national retailers or via online delivery. He also took his state-of-the-art indoor vertical farming concept and turned it into a successful agricultural business model that can be replicated by individuals.
“Over the last four years, we’ve gone from one farm to 28 across South Africa, spanning Cape Town, Soweto, and KwaZulu-Natal, and there are currently plans to expand even more,” says Hein.
“Online retail allows for more flexibility in inventory management. Retailers can, for example, adopt drop shipping models, where the products are shipped directly from suppliers or their retail stores (click and collect is a great model for this), reducing the need for storing inventory. Physical stores, by contrast, require dedicated space for inventory storage, potentially further increasing costs,” adds Bronkowski.
Communication and affordability in tough economies
“In tough times, it’s crucial to understand that we’re talking to people,” says Andrew Bourne, regional manager: Africa, at technology firm Zoho. “A better understanding of our customers’ needs and challenges is required. It is important to recognise that this is an opportunity to learn more about your customers.”
Bourne goes on to say that it’s become even more important to ensure that any communication is not only effective but also meaningful. “Check in with your customers to see how they are doing and what special needs have arisen as a result of the rise in the cost of living.”
When it comes to small businesses, this could mean giving them free access to software so that they can find their feet while times are tough. “Zoho’s small business emergency subscription assistance programme gave disrupted businesses access to Zoho software for free for three months to offer some reprieve during challenging economic times,” adds Bourne.
In conclusion, businesses must be willing to adapt, whether through offering innovative products and services, embracing e-commerce, or enhancing communication, to thrive in Africa’s evolving business landscape. As the digital economy continues to grow and customer expectations evolve, the ability to pivot and innovate will be the key to increasing revenue and maintaining competitiveness.