While the e-commerce sector continues to grow in popularity, dropshipping businesses are still largely unexplored in South Africa. Dropshipping is a form of e-commerce and involves selling physical products from an website, but without having to keep stock or handle the product. It’s basically a fulfilment model where a dropshipper acts as the go-between for a customer and wholesaler.
Dropshipping is a good option for first-time business owners for many reasons. It’s relatively low-risk, and has limited capital requirements. Business owners are also able to sell a wide range of products on their online store since they do not have to stock the physical product in a warehouse.
Entrepreneurs must, however, ensure they select the right products as certain products may be more profitable to dropship in South Africa than others. According to Bizcommunity, the top e-commerce product categories in South Africa are clothing and apparel, appliances, baby toys and kids’ books, cellphones, tablets, electronics, fashion and accessories, office stationery, pets, outdoor, and luggage.
In this guide, we’ll cover a few of the essentials you’ll need to know if you’re planning to start a dropshipping business in South Africa.
Dropshipping versus traditional e-commerce in South Africa
The biggest difference between dropshipping and traditional e-commerce is with the fulfilment of the order after a sale is made. Under the traditional business model, retailers are responsible for order fulfilment, which is the delivery of the products – from start to finish. It includes the entire process such as receiving orders, managing inventory, the storage facility, order processing (packing and getting items ready to be shipped). Other factors traditional e-commerce stores have to consider is shipping, as well as the returns process if customers return an item.
Where the two models are similar is that they both require an e-commerce website where customers can make purchases. This means with a dropshipping business it’s the business owner’s responsibility to build an online store. It’s also their responsibility to attract traffic to their online store in order to make sales. Lastly, business owners must secure an online payments gateway. This technology enables your business to accept bank cards and other forms of online payments.
Dropshipping business challenges in South Africa
One of the biggest success drivers of a successful dropshipping business is sourcing a good selection of products. This is a major challenge in South Africa because of a limited number of suppliers of products. This makes it harder for business owners as they have limited products and brands to choose from.
In addition to limited product selection, drop shippers do not have a lot of control over the products they stock. Typically, the supplier is responsible for designing and branding the product that is being drop shipped. This can make it difficult to differentiate your product and stand out as your products are not custom-made. Other challenges that are specific to dropshipping are low margins and operating in a highly competitive space.
Overall, dropshipping can be a lucrative business opportunity provided you do your research and source the right products. It’s equally important to market your online store to increase the visibility of your business among potential customers.