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Business opportunities in South Africa

Location-Independent Business Opportunities In South Africa That Require Little Investment

Are you looking for the best business opportunities in South Africa and beyond?

With an unemployment rate standing at 26,7% according to Stats SA in 2018, an uncertain labour market and millions of low-paying jobs that barely pay the bills you may indeed be better off exploring attractive business opportunities in South Africa and beyond.

Fortunately, we are living in the 21st century where the internet and countless digital technologies make it possible to run businesses with low set up costs from anywhere in the world. So why not take advantage of the many new business opportunities that the internet gives rise to?

Whether you want to start your own e-commerce business, a dropshipping business, an affiliate marketing business or a digital media company there are plenty of great business ideas in South Africa where you can start your own business at very little cost.

Start your own Ecommerce Business

According to research by global consulting company McKinsey ecommerce in Africa will account for $75 billion by 2025 which will be equal to 10% of all retail sales. In particular, Nigeria, Kenya and South Africa are expected to dominate ecommerce as they are already doing it now.

South Africa with its population of 55 million, a substantial middle class, an internet penetration of 55% and great cross-border potential offers one of the best environments on the African continent to start an ecommerce business.

According to Statista, ecommerce revenue in South Africa in 2018 has exceeded $2,913m with a 15% year on year growth. The market's largest segment is Electronics & Media with a market volume of US$933m in 2018.  This shows that business opportunities are waiting to be exploited.

However, this is not to say that running an ecommerce business in South Africa is a piece of cake. In fact, 70% of ecommerce businesses on the continent are currently not profitable. There are many reasons contributing to this including last mile delivery being very expensive, a large unbanked population and complex logistics problems.

Despite these challenges, starting an ecommerce business has become a lot easier in the past few years with the rise of ecommerce platforms like Shopify. Shopify is the leading cloud-based, multi-channel commerce platform designed for small and medium-sized businesses.

SHopify screenshot

You can use Shopify to design, set up, and manage your stores across multiple sales channels, including web, mobile, social media, marketplaces, brick-and-mortar locations, and pop-up shops.

Previously you needed to engineer your own platform, handle shipping and find solutions for accepting payments. Today? Shopify takes care of that so you can focus on growing your ecommerce business.

More and more South African entrepreneurs are taking advantage of the business opportunities provided by Shopify and the Internet. Whether it is a business like Beardmob that sells beard care products for men or Absolutepets that sells products to keep your pet happy to over 3300 other ecommerce shops in South Africa. There has never been a time like the present to benefit from ready made ecommerce platforms.

Meanwhile over 600'000 businesses globally are powered by Shopify while over $82 billion dollars have been sold via the platform at the time of writing. One of those 600'000 global businesses is Kenyan ecommerce success story Soko. As such, you can rest assured that Shopify makes it as easy as possible for you to succeed in ecommerce.

If Soko can start a successful ecommerce business in Kenya, what is stopping South African entrepreneurs doing the same in South Africa?

Soko: Kenyan ecommerce success story powered by Shopify

Soko is an ethical fast fashion ecommerce business that collaborates with marginalized artisans in emerging markets while creating over $1m dollar of income to 2500+ artisans since its founding in Nairobi, Kenya. Kenyan cofounder Catherine Mahugu has since made it on to the prestigious Forbes Africa 30 under 30 list thanks to her entrepreneurial success. The success of Soko has in part been made possible through Shopify as it powers the ecommerce technology behind the successful business.

Costs of running an Ecommerce business

The costs of running an Ecommerce business depend on your needs to a large extent. Costs can be as little or as large as you make them to be. Obviously, you have the cost of registering your company with the companies and intellectual property commission (cipc) for R125 pus the cost of reserving the name for your company at R50. This would be standard for any business.

However, with some careful planning it is hard to argue that running an ecommerce business is not significantly cheaper than setting up a brick and mortar store.

At the time of writing, the Shopify basic plan starts $29 per month. This includes web hosting, over 100 conversion optimized online store designs so you don't need to hire a designer as well as the handling of payments.

After that a lot depends on your marketing stack and your digital marketing strategy. For example, for your email marketing needs you could go with Mailchimp which offers you a free plan up to 2000 subscribers per month, GetResponse which is an all-in one marketing platform starting at $15 per month right up to a very sophisticated visual marketing automation solution with Ontraport starting at $79 per month.

If you are looking to run your business in the leanest ways possible chances are you will need to rely on SEO to generate traffic as paid advertising can cost a lot of money very fast. One of the advantages of SEO is that it is "free" traffic in that you do not have to pay for each click unlike with paid advertising.

However, the key to succeeding with SEO is to do keyword research, taking care of technical optimization such as ensuring your site is indexed correctly while producing great content and building links. Theoretically, you can do much of this with the help of free tools like Google Search Console.

In reality, you want to use the help of professional SEO tools if you can afford it. One of the more affordable tools is Kwfinder at $29.90 per month. A more advanced solution is SEMrush which starts at $99.95 per month but has one of the biggest keyword databases for African markets. A nice bonus is that SEMrush offers a free introduction course on SEO.

Beyond that you can add a huge number of technologies to further improve your ecommerce sales, optimize your conversion rates and increase customer retention. For example, you can incorporate a livechat software in your ecommerce store and help customers faster while they are browsing your shop and thereby increasing chances that they will purchase from your store. Live chat offers a starter package for $16 per month.

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It is difficult to give an indication of what starting an ecommerce business will cost as so much depends on the kind of ecommerce business you wish to start, the tech stack you wish to deploy and whether or not you decide to spend money on advertising.

Other important costs to bear in mind are obviously the types of products you want to sell, how much they cost to produce, how to manage your inventory and shipping. Despite these costs, starting an ecommerce business costs much less than a brick and mortar shop. Plus, in a digital economy you stand a better chance of succeeding with an ecommerce store.

Start your own Dropshipping Business

Dropshipping is similar to starting an ecommerce business with the difference being that products are not held in stock but only bought from suppliers once the products have been sold to the end-consumer. The fact that the products are not held in stock is the biggest difference between the standard retail model and dropshipping.

Moreover, the supplier usually sends the product directly to the consumer without it passing the merchant at any stage of the fulfillment process. This means you do not need to worry about shipping, packaging or holding inventory. Dropshipping can be thought of as Ecommerce without inventory.

As such, this business model is really location independent as it allows you to run your business from anywhere in the world as all you need is a fast internet connection and tools like Shopify and Oberlo.

For example, Oberlo makes it really easy for you to source products from suppliers around the world by giving you access to a marketplace where you discover a huge variety of products, and add them to your store with just a few clicks. By benefiting from the verified sellers feature you can see who the top performing suppliers are with highest quality service for users over a sustained period.

Whether you want to run your business from Johannesburg, Cape Town, Hawaii, Bali or Rio targeting customers in South Africa or anywhere else in the world is up to you. In fact, if you are targeting customers in Europe, America or Australia you are avoiding many of the problems that are plaguing ecommerce in Africa.

dropshipping africa

In the last decade dropshipping has become a popular business model due to the advancement of the internet and enabling digital technologies. According to americommerce, 22-33% of Internet retailers have adopted drop shipping as their primary method of order fulfillment. Famous companies using drop shipping include Amazon as well as Wayfair.

Nowadays, dropshipping businesses can be sold on online business marketplaces such as Empire Flippers, FE International or Shopify's own marketplace for fees ranging in the low 5 figures up to a couple of millions dollars.

Online business for Sale

Drop Shipping Business for sale on Empire Flippers December 2018

Many of the businesses that get sold on these marketplaces are often only a few years old - anything from 18 months to 3 years is not uncommon. This means you can start from nothing and sell your dropshipping business for anything between 5 to 7 figures in US dollars. 

Unless you are among the lucky few who are in a high-paying corporate job, it is very difficult to generate that kind of money within such a short space of time legally in South Africa. Especially, if you consider that the average salary in South Africa is about ZAR 250'000 per annum.

Therefore, drop shipping could be an interesting business opportunity for aspiring South African entrepreneurs who want to benefit from low-start up costs, a location independent business model and being able to target a global audience from the start.

Start an Authority Site

You may not know what an Authority site is and how this is an interesting business opportunity. So let's start at the start.

Authority sites usually are content-driven websites that are a respected and trusted source of information on a topic like finance, home improvement or travel. Authority sites deliver real value through excellent editorial standards. This makes people trust the advice and recommendations from the site.

Many authority sites are built without selling any kind of physical products as they make their money either through affiliate marketing in the form of recommending products, display advertising or selling their own products in the form of online courses or books.

As such, authority sites have many advantages like

  • having no physical assets
  • virtually no customer service
  • they are location independent
  • very low cost to get started

There are many very successful authority sites making millions of dollars in revenue. Among them are Nerdwallet, Nerdfitness, Dr Axe and the Points Guy. In 2012, UK authority site moneysavingexpert got sold for £87 million, while in 2016 the world famous New York Times bought The Wirecutter for $30 million dollars, which at the time was only 5 years old.

Nerdwallets's Homepage

How many traditional South African businesses that get sold for £87 million or $30 million do you know? This goes to show that with an authority site business model you can outperform a traditional business if you go after the right market. In particular, if you build an authority site catering towards a (South) African audience producing local content. Currently, there are barely any (South) African authority sites so this is a great time to get started.

If you are interested in building authority sites and want to learn how to do it the team over at Authority Hacker will get you started with free video training that will give you all the tools and tactics you will need to be successful.

In fact, one of our own countrymen Robert Botha managed to build an authority site making $8500 per month in only 9 months using the tools & strategies taught by Authority Hacker. This goes to show that with some hard work and dedication you can go far.

Just like dropshipping businesses get sold on various online business marketplaces like Empire Flippers so do Authority Sites. In fact, Authority Sites are very popular as they require less technical know-how than most other online businesses.

As such, it is possible to build an Authority Site and sell it for 6 or 7 figures in the space of a few years depending on your progress. This shows that building an Authority Site can be a very lucrative business opportunity.

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Costs of running an Authority Site business

Starting an Authority Site business is probably one of the business models that requires the least capital investments of all. All you need to get started is some hosting, Google Analytics, a content management platform like WordPress and some SEO tool that allows you to do keyword research.

If you want to be fancy you add a premium WordPress Theme like Thrive Themes and an Email Marketing tool such as Getresponse which comes with a 30 day free trial. From there, you can add to your tech stack when needed and when your revenue allows for it. If you want to take bootstrapping to the extreme then you should definitely be able to get everything you need for under ZAR 10'000.

However, keep in mind that as you scale and add choose more sophisticated technology to power your Authority Site those costs can quickly escalate.

Start an Online Education company

Education is being disrupted as we speak. The idea that you only needed to study until you started your first job is definitely no longer relevant in the 21st century. Nowadays, people need to constantly educate themselves and acquire new skills as everything is changing at dramatic speed.

According to Forbes, the online education market is poised to grow $325 billion by 2025. And according to online course creation company Podia online courses generated $48 billion in revenue in 2018 alone.

Online courses are booming because work fields are constantly changing. In the digital age, anything can change in an instant. Revolutionary products come out, new tools are developed, and new individuals or companies can quickly influence a field.

For example, Search Engine Optimization is constantly changing and what is true today won't be as relevant anymore in 3 years. That is why online courses on fast moving topics like SEO, Email marketing, Analytics and many others are so in demand.

As such it is no wonder, that online universities like Coursera, Udemy or South Africa's Getsmarter as well as platforms to create your own online course such as Podia have emerged over the last decade. 

And you know what? According to our own research, there are very few online courses that cater for African audiences and needs. That is a big opportunity to start a business and be amongst the first movers. Who is to say you can't create a successful online course teaching Zulu or cooking traditional African meals?

If starting your own online education company with profitable online courses is for you then take action by learning how to create and sell a profitable online course.

Conclusion

Starting an online business in the right market could be a great business opportunity in South Africa. Not only is the country experiencing a transformation towards an increasingly digital economy but the majority of the young people have grown up with the internet, are comfortable making online purchases and spend much of their time online.

Moreover, compared to setting up a brick and mortar store starting an ecommerce is definitely much cheaper and involves very little cost. Take advantage of the business opportunities around you with the technologies at your disposal. South Africa is ready for business in the digital economy.

Let us know in the comments which business opportunity appeals to you the most and why.

About the Author Rise Africa Rise

Rise Africa Rise is your online guide to tech entrepreneurship and (social) innovation for African entrepreneurs, startups and businesses. Our aim is to provide you with valuable digital strategies, tools and insights to support you in building a world-class and competitive business in the 21st century.

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