7 Steps to start selling online in South Africa (or globally)
Payfast (South Africa’s Paypal) just released the stats for the lock-down period. Its official, South Africans are now buying more online, it took a crisis to encourage us to do so, but it will only keep growing going forward.
Sectors show growth in online transactions during lockdown (www.payfast.co.za)
Here are 7 steps to start selling online:
Step 1 - Choose your products/service
This might be the most difficult step, but here are some questions to ask yourself that might help you:
Which products do I/we use every day that can be bought online? - I know a couple with a baby that start selling baby bottles and a lot of baby accessories online.
Which products are in high demand with only a few suppliers?
Which products do you have access to that can be sold online? - I know someone that has access to an importer of water sports equipment, which they then started selling online with huge success.
Do you know of products that are only available at certain stores? - There might be a brand currently only selling in Gauteng which Capetonions would love.
Is there anything that you make in your home or garage that other people might love to own?
Do you have a service that you can start selling online? - Think out of the box. You might be the best grief counsellor in South Africa, why not offer your services online?
Choosing a product/service is key and here are a few considerations:
Can the product be shipped or delivered online cost-effectively?
Can you deliver the product/service in a timely matter? - No one wants to wait a month for their baby bottles to arrive.
Can your supplier match your demand?
Step 2 - Choose your inventory management system
The ideal scenario is to do ‘Drop Shipping.’ This is where you sell a product and the product is directly delivered from supplier to customer. This process works as follows:
The customer buys from you and pays you.
You order the product from the supplier and you pay them
The supplier sends the product directly to your customer - The risk you take in this situation is if the supplier does not have stock, or ship the product in time. On the upside, you do not have to keep any stock on hand, which helps with cash-flow.
If you have to have inventory in stock, ensure that you only have the minimum you need to serve your market. Remember, inventory costs money and stock on your shelves cannot be used to buy anything else. Cash flow is king!
I have consulted with businesses which have more non-moving stock (stock that did not sell in the last 2 years) in the store, that moving stock. Inventory management therefore is of utmost importance. It is better to sell non-moving stock below cost than to sit with it for years and eventually discard it.
The bottom line is to keep a very close eye on your stock - or better still - use someone else’s stock to sell.
Step 3 - Have a very clear understanding of who is potentially going to buy from you
Every time I ask someone who buys their product and the answer is “everybody,” I want to run a mile. It might come as a surprise to some, but not everyone is in the market for baby bottles, or water sports equipment, or grief counselling.
The more clearly you can define your ideal customer, the better your chances of success. Here are a few criteria that should be used to define your customer:
% of Male vs Female
Where do they live (Can you sell to them globally)? I know a company in Pretoria that sells boerewors and biltong equipment to many South Africans living abroad.
On which online platform do they spend their time (Facebook, Instagram, LinkedIn, etc.)?
What is the problem they have to which you are offering a solution? (Remember a business exists to solve other’s problems)
What are their aspirations?
What are their challenges pertaining to your offering?
How big is the market, i.e. how may products can you sell?
What alternative products/services are available to them?
Step 4 - Choose the right online platform
There are a lot of online sales options and platforms available. Below are a few, stating their advantages and disadvantages:
You’re own Website eShop (Ecommerce)
You have full control
It will help with your brand building
You are responsible for driving traffic to your website
If not done correctly, you might lose money setting it up
Selling via platforms like Take-a-lot, Amazon, etc.
They drive the traffic to a certain extent
People trust them
You need to pay part of your profit to them as commission
All your competitors are displayed right beside you
Selling via a Facebook marketplace
Quick to get up and running
Lots of potential customers
Products need to be loaded frequently to rank highly
It does not have full eShop functionalities, like payment gateways and order forms
Even platforms like WhatsApp are used by some people to sell. I know a lady that makes the best “Vetkoeke” in her own town, and when she has available stock she informs a WhatsApp group which normally helps her to sell out in 20 minutes.
Quick and easy
Does not have full eShop functionalities like payment gateways and order forms
Limited to the number of contacts on your WhatsApp groups
Selling via Emails can also be hugely successful
Very targeted market if done correctly
You have full control over what is sent out
It takes time to build a quality data base
More time is spent on selling admin, answering emails, getting paid, etc.
Step 5 - Choose the right Payment Gateway
To get paid online you will need a Payment Gateway, these are companies that handle Card and EFT transactions on your behalf. Only large businesses can deal directly with the banks via Merchant Accounts which take weeks to get approved and setup takes another few weeks.
I refer my clients to www.payfast.co.za as they do not charge any upfront or monthly fees. Their support is also very good and in the last 10 years I have never had a client that had any problem with them.
PayPal is also a very good one to use if you sell your products in Dollars or Euros, or basically any currency except Rands.
There are a few other payment gateways, but most of them charge a monthly fee. It is also important to check if your eShop can integrate with these Payment Gateways.
Step 6 – Market, market, market…
The old saying goes “You might have the best product or service in the world but if no one knows about it, it is worthless.” To be successful with online selling you need to market your products/services constantly. Fortunately, there are quite a few online options available:
To successfully sell online it is best if you can start by spending at least 20% of your estimated sales revenue on marketing. The bigger you marketing budget, the quicker your online selling will start, so take these few considerations in mind:
Always start with a small amount (R500 - R1000) and test the success of your marketing adverts
If it doesn’t work at all, change your marketing adverts and try again with the same amount.
Repeat until you find the ‘sweet spot’ – an effective marketing strategy - and then start spending more
Always calculate your CAC (Customer Acquisition Costs).The amount spent on marketing, against the amount of customers gained from this marketing, equals your CAC. Example: If you spend R30 000 on marketing and you get 100 customers, your CAC = R300. Therefore it costs you R300 to land a customer. You need to then determine if this is worth your while.
Step 7 - Customer service!!
Whenever I swipe my card online at a new eShop I am, by default, always nervous. Are they legit? - am I going to get the product/service? These are the questions that rush through my mind. The first thing that I check is my emails - did I get an invoice from them? - are all their details on there?
I ordered a product from the US which I saw on a Facebook advert 4 months ago and I have still not received it as yet. I cannot seem to find the email that they sent after the transaction. I lost $59 and am now very cautious about ordering from Facebook ads.
There is a saying that states “Service sells.” Why do I recommend Payfast, Xneelo and FNB? - Because I get excellent service from them. Are they the best in their fields? – Maybe, maybe not, but they sort my problems in a timely matter, and this is what you also need to do for your customers.
A follow-up email 2 weeks after shipping to confirm they received your order, might just seal the deal for your next order.
Making money from online selling might not produce fireworks in the first few months, maybe even a year. If you persist however, and give good service and products to the right customers in a user-friendly manner, you might just find yourself with a business that runs 24/7 without you ever opening and closing any doors.
Happy online selling.
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