Shein South Africa, a popular online fashion retailer, has disrupted many businesses, especially small businesses. With its vast and affordable catalogue, Shein’s presence in South Africa has been concerning for small businesses. The e-commerce company has used extensive marketing to reach large audiences.
The Singapore-based company came to South Africa in 2020 and has garnered around 250 000 shoppers since then. Although the company is widely popular with consumers, it has not been as popular with small businesses.
In this article, we look at how Shein has impacted small businesses and how you can improve your business to compete with a big company like Shein.
Small Businesses Cannot Compete with Shein’s Marketing Reach
With over 200 000 shoppers, Shein South Africa is the go-to retailer for a lot of South Africans. Even with the long wait for products to get shipped, many still prefer Shein. A reason for this could be the company’s extensive marketing.
Marketing for a small business can cost between R 1 000 and R 6 500 per month. This fee usually covers content creation and platform management (if needed). The price can increase as your business increases which can make it hard to keep up with the costs. Because Shein is a global company, the cost of marketing is high, but they can afford it.
Additionally, the company has been able to set pop-up ads on social media, which means it can reach a much bigger audience than a small business.
Small Businesses Cannot Match Shein or Temu’s Pricing
Shein’s low pricing for its various products such as clothes, shoes, homeware, hair products and tech gadgets etc., make it ideal for South Africans. The prices are remarkably low even when combined with shipping charges.
As a small business, it can be difficult to compete with the low prices offered by Shein. Businesses that create small-batch handcrafted products in particular cannot compete with Shein’s low prices, usually because of the high input costs of specially sourced ingredients.
Recently, the company came under fire from the South African government. The government introduced higher import taxes on smaller clothing items bought from international online retailers.
South African Revenue Service (SARS) is now taxing all clothing parcels with an import duty of 45% plus VAT. This is important because previously, small business retailers were (and still are), paying the 45% plus VAT fee on imported clothing regardless of where it is sourced from.
Shein Impacts Employment in South Africa
South Africa’s fashion industry is still growing. And although technology such as e-commerce has made the audience reach better, local designers cannot compete with Shein.
More than that, Shein and other similar sites impact employment in South Africa because of selling to South Africans without putting money back into the country’s economy. They don’t erect infrastructure, create jobs in the local market or manufacture products locally. All that these businesses do is extract money from citizens.
Battle the E-commerce Giants
As a small business, you can use a page from big e-commerce sites to make changes to your business and gain customers and sales. Consider the following strategies:
- Mix around your products/services. This can help introduce your business to a different audience which can lead to more money and business growth.
- Try to offer customers local products and unique offerings. This will help you keep prices low (buying local) and it can give potential customers something different that is not readily available on the market.
- Tap into technology and create an online store. People like shopping online especially if your physical store isn’t available in their area. By starting an online store, you can tap into a wider market. This will also help with marketing because most e-commerce platforms have built-in tools for marketing.
- Work together with other local businesses. By collaborating with other SMEs, you can tap into their customers, and you can get help in improving their business. Additionally, collaboration can give your customers more products or services to choose from.
The arrival of Shein South Africa has been difficult for small businesses. And although the government is putting restrictions towards the company, many South Africans still prefer it.
As an SME, you will need to make improvements to your business. This will help you be more competitive with big businesses. By understanding the impact of Shein, you can adapt your business strategies to thrive in South Africa.
To find out more about e-commerce, read our guide to E-Commerce in South Africa: A Guide for Businesses.
