It is a feature that is:
- simple to use
- easy to configure
- affordable to install
- easily accessible to consumers, and
- creates 24/7 availability of a brand’s products.
With all of this in mind, it’s no wonder more and more South African entrepreneurs are evaluating their e-commerce options. And among the many things they need to consider while building an online store, one of the first things is which e-commerce method they would like to pursue.
So if you’re thinking about what to do when entering this space, don’t worry – media update Lara Smit is here to help lead the way.
Curious about your options? So let’s put them in our cart and check them out:
1. Shop till you drop with dropshipping
Dropshipping is one of the easiest ways for an entrepreneur to enter the e-commerce game. The way it works is that a person can create an e-commerce storefront where they can list products that online users can purchase using their payment method of choice.
This storefront is connected to a dropshipping supplier and when an order is placed on your store, it is communicated directly to the supplier. This is where the supplier processes the order and ships the product to the consumer who ordered it through your website. It’s so simple.
The supplier will, of course, receive payment for the product and you will receive the markup you placed on the product on your website.
So, as with any decision, we have to weigh the pros and cons.
- You don’t have to pay or manage storage.
- It saves you weather and work because you don’t have to pack or deliver the products.
- Your product range is not limited because your website can sell a wide variety of products.
- You can run your business from any place because you don’t have to manage a warehouse.
- You have to rely on suppliers.
- Sometimes it’s hard to keep track of inventory.
- You have little control over quality. Therefore, if a product is lost, damaged, of poor quality or there are shipping problems, it becomes your responsibility.
- There is a lot of competition.
2. Settling in a market
Marketplaces are established e-commerce websites that allow entrepreneurs to list and sell their products using these platforms. With this method of e-commerce, entrepreneurs can either store their products in warehouses owned by the marketplace or store them in their own facilities.
The most popular types of e-commerce marketplaces are Takealot, Bidorbuy, Amazon, and Price Check.
- Marketplaces receive a lot of traffic and therefore reach a wider audience.
- Marketplaces are reputable and consumers are more likely to trust brands that sell their products on these platforms.
- It is affordable to market on these platforms.
- It creates healthy competition to have similar products sold alongside yours where prices and specifications are comparable.
- Marketplaces charge for their services, which means they may charge a commission for each sale. These fees can be a challenge for small businesses with fewer products than larger businesses.
- Marketplaces can be restrictive because you must respect their terms and conditions.
- You won’t have access to any customer data using this platform like you might with your own website.
- There may be a delay in receiving profits from your products sold on the platform.
3. Become an online wholesaler/retailer
This hands-on approach to e-commerce is much more taxing for entrepreneurs and businesses, as it requires greater involvement on their part.
This method requires store owners to buy products from a supplier and store them in a warehouse. Therefore, when a customer orders the product online, the store owner has to ship the product from their warehouse.
- You have better quality control because you are involved in inventory, packaging and shipping.
- You have direct interaction with customers.
- You have no additional costs.
- This requires store owners to invest a lot of money at the beginning.
- He is very time-consuming and laborious.
- Buying stock in advance means you may have leftover product.
4. Create your own private label
When creating your own brand of products, you can employ a company to manufacture products for you based on your own designs. From there, you can either use the services of a marketplace to sell your products, or sell them directly to consumers through your own e-commerce site.
- When you hire the services of a manufacturing company, the costs of producing your products can be surprisingly affordable.
- There is less competition for unique products.
- You have more quality control over manufactured products.
- Your products can be tailored to consumer needs and specifications.
- You are in direct contact with customers.
- It is demanding and time-consuming to manufacture your own products.
- If you use external manufacturers, you must rely on their capabilities.
- Manufacturers require a minimum number of orders.
- You need to create brand awareness from scratch.
5. Name an unnamed brand
White labeling refers to when a brand purchases already created products that have a white label option where you can rename, relabel, and redesign the packaging for those products.
The owner of an online store orders white label products from a supplier and has the product validated. They then store these products and ship them to customers who order from their e-commerce sites.
- Products are established and do not need to be sourced or made from scratch.
- The packaging is customizable to the image of the brand.
- It is more affordable to procure goods than to manufacture them.
- It takes less time.
- Manufacturing companies require a minimum amount of orders.
- Although you can customize your label, it can still be influenced by manufacturer specifications.
- You have less control over how goods are produced when they are created by a manufacturer.
Do you have any advice for people entering the e-commerce space? Be sure to let us know in the comments.
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For more tips on how to adapt to the e-commerce space in South Africa, be sure to read our article, How South African businesses need to adapt to the e-commerce space: A Q&A with Jake Rubinstein.
*Image courtesy of Canva
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