Women running a fashion business

The Age of Digitalisation: The viability of running a successful online business in South Africa

July 1, 2021

With increased digitalisation and embracing the modern world of technology, the number of internet users continues to grow on a daily basis. This has opened up numerous windows of opportunities for South African entrepreneurs to undertake business ventures within the online business realm. Due to the challenging economic times, many South Africans are obliged to or are choosing to start their own businesses, either on a full- or part-time basis. The internet has become a viable option to make an income through running a business to sell goods or offer services across various online platforms. Consequently, small businesses ideas are thus starting to transform into flourishing realities! This blog will examine the status of small businesses in South Africa, the viability of e-commerce and dive into the most popular product offerings.

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A surge in the number of small businesses across South Africa

There is no doubt that small businesses have started showing their increasing presence within the South African economy. In 2013, small businesses generated 16% of the total revenue within the formal business sector. However, over the last few years, it is evident that this parentage is entering new heights with small businesses growing in leaps and bounds, as reflected by its contribution of 22% of total revenue in 2019. Although large businesses still comprise the greatest portion, this contribution is slowly starting to decline.

With the challenges brought about by COVID-19, many industries are struggling to survive. However, this is not all doom and gloom. For example, in the construction industry, many large businesses are filing for business rescue. This has created some promise for small businesses, as there has, consequently, been a boom in small business development to fill the much-needed gaps within the industry.

The viability of e-commerce offerings for small businesses

South Africa’s e-commerce sector has also witnessed an upsurge of growth. According to FNB analysts, the average e-commerce spending in the first half of 2020 increased by 30% in comparison to the previous year. Rand Merchant Bank expects the e-commerce sector’s value to surge by 150%, to R225 billion, within the next five years.

So, what has caused this large growth and expected progress within the e-commerce sector?

Well firstly, the worldwide COVID-19 pandemic has brought about very stringent restrictions which has changed business’s strategies and models in terms of available opportunities and a shift towards offering online shopping platforms. A large benefit of offering an online store is that it gives businesses an opportunity to connect with a wider range of their customer base. Your customers are no longer limited (due to regulations) to a certain number of people within a store. It does not matter whether customers are receiving their online goods through delivery or pick-up, people are really starting to see the benefits associated with non-physical shopping, especially in the midst of a pandemic.

Secondly, another huge contributor that should encourage businesses to use e-commerce is South African’s enhanced awareness and desire for digital convenience. There is no doubt that digital transformation is forcing companies to change their business models and adapt to a new market reality. It is not always the company itself that is driving this change, but it is being demanded by the customers themselves. Customers now want to make online purchases at any time, at any place and on any device. They are termed the “always-connected customer” and are demanding a very specific type of customer experience.

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Popular and trending products to sell in 2021 as a small online businesses

The viability of any business depends on meeting customer needs through filling a gap in the market. To ensure that you meet the demand in the market, innovative goods or goods that will substitute the existing ones in the market need to be developed.

What kinds of goods are taking the small online business industry by storm? What are the most popular products to sell online that you can choose from?

1. Telecommunication and internet offerings

Throughout the global pandemic, digital technologies have become critical enablers of connecting people (on both a social and business level) more than ever before. Since many countries are encouraging their populations to stay and work at home, computers and smartphones have become a lifeline to many. These online technologies have become the new substitutes for in-person activities. Consequently, the need to access reliable digital infrastructure is fundamental and increases the range of ICT opportunities for small businesses, including telecommunications, food delivery, logistics, contactless payments, online entertainment and remote learning.

In South Africa, many businesses are encouraged (and sometimes obligated) to operate remotely, which means that there is a higher demand from employees for computers, laptops and other electronic devices. Consequently, entrepreneurs cannot go wrong by offering much-needed digital services, such as telecommunications or internet/fibre packages. The popularity of these products is evident in South Africa’s fibre market being categorised as one of the highest-growth industries. The industry has expanded by 168.2% since 2015, according to Communications Regulator, ICASA.

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2. Clothing and Fashion

Another popular product for small online businesses is clothing.  E-stores can allow consumers to order any fashion products, and this can be done within the comfort of their own home. Online clothing businesses are helping customers in their shopping process with the use and integration of a wide variety of technologies.  An example of such a tool is the inclusion of convenient and safe payment methods. Furthermore, modern e-commerce websites are becoming so advanced and are improving the satisfaction of their customers by allowing virtual changing rooms whereby consumers can try out various apparels virtually. According to Shopify, it has been predicted that the global virtual fitting room market will grow from $3 million in 2019 to $6.5 million by 2025. This provides evidence of the increasing opportunities that are available within the fashion industry for online businesses.

Moreover, e-commerce has opened up the doors for local South African suppliers of clothing and accessories. One challenge faced by small businesses is the struggle to connect with potential buyers, as they often start off with a small number of clients or even only a single local redistributor. However, the emergence of online marketplaces allows local sellers to access new markets and overcome this challenge. For example, there are many online platforms that allow African artisans and designers to access global markets that seek to purchase African products. E-commerce not only helps these businesses with an expansion of customers, but also allows them to reach more suppliers and expand their product range.

one woman using a computer and two women looking at clothes
Photo by Thirdman from Pexels

Although these are just two examples of popular products, the list is endless. A huge window of opportunity has been opened for online sellers, retailers and marketers in a large variety of sectors.

This blog just covers the tip of the iceberg when it comes to investigating the viability of operating a small online business. There are many other considerations, such as:

• Social media platforms;

• The importance of digital marketing and a professional online branding;

• The rise of new and cashless payment methods and online money;

• Business diversification;

• Cybersecurity;

• Ensuring the distinctiveness of your small online business.

These above-mentioned points will be discussed in our blogs to follow.

It is clear that there is definitely space for small, online businesses to flourish in South Africa. COVID-19 has shown the world just how important advanced technology and internet platforms are, especially for consumers. This blog has provided evidence regarding the surge in the number of small businesses across South Africa in the past few years. Such businesses are increasingly contributing to the formal business sector. This surge has been brought about by a variety of reasons, but the most prominent two being the increased attractiveness of online shopping, as well as customers desires for digital convenience and experience. Thereafter, the blog explored the wide windows of opportunity in terms of popular product offerings, with particular attention being given to servicing remote-work needs, as well as the clothing and fashion industry. There is not doubt that there is much to say about the viability of operating small online businesses and we look forward to witnessing the trends to come.

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