One of the most common local business models is to import a product from a overseas manufacturer and resell it in South Africa.
Business Model
The most common business model in this industry is buy from manufacturer and distribute to a wholesaler or a reseller. There are small businesses that import smaller quantities and sell retail (direct to customer), but distributing and selling wholesale is often the safer business model (as you have people selling the product for you), whereas if you sell retail or direct to consumer you need to fulfill individual orders yourself.
The most successful business model employed by small businesses is to carve out a niche, yes you will get competition but by becoming a first mover or even agent in the country will give you a competitive advantage.
What to sell / Where to find opportunities
This is what will make or break this business: the product. Now this can be anything from raw materials to completed products, tools, equipment, consumer goods, electronics etc.
If you decide on consumer goods which is a large market, you need to stay ahead of the curve as to what is trending internationally and then decide whether it will work in SA, it does not have to be a trend it can be a fad as well, fidget spinners being a good example. Some people made a lot of money, with high margins when it was in its peak but now its sells for next to nothing with little demand.
One trick the Chinese use is to scout crowd funding websites such as Indiegogo and Kickstarter and see which products are popular (fully funded). Before the project owner has shipped their first order then the Chinese have already knocked it off and its available for sale on platforms such as Alibaba.
I’m not say you have to knock off crowd funding projects but it’s one way that entrepreneurs can keep their pulse on international trends (and fads).
Another way to find opportunities is to look for what is needed in the country. We know South Africa has a high cost of living due to incompetence and corruption. Electricity is expensive (and unreliable), so many people are turning to solar. There is an opportunity there, although that market is very competitive now.
Another massive market is safety: South Africa is one of the most dangerous countries in the world, with a private security force double that of SAPS and the SANDF combined. People spend a third more on private security than the government spends on police. People live in fear, you can’t enjoy yourself without worrying about your safety – the self defense industry is booming (stun guns, pepper spray etc.), so is CCTV and the barbed wire and electric fencing business but there are already incumbents there in the home industry.
What about vehicle safety? Is there a market outside of already covered by alarms, tracking devices, steering wheel and gear locks? You cannot stop at a robot in most areas in SA without being at risk of being robbed (usually via smash and grab) or hijacked. While the smash and grab film/tint business is fairly competitive there is a market for bullet resistant glass. This can be actual bullet proof glass, or thicker or even ordinary glass that has been coated with a thick enough window laminate film such as Profilon AX-A1 (the glass is not bullet proof and the film is not bullet proof but used together they can withstand bullets).
Another big market is the small business market, whether in the informal or the side business market. A third of the country is unemployed and people who work are struggling to get by. So they want to start a business or side hustle, can you import equipment they can use to start a business or cheap products they can resell?
These opportunities all involve looking at South Africa on a macro level and solving the “big” problems. There will be smaller problems and even luxury first world problems to solve. But both of these will have some competition. The successful people are the ones that predict future problems, Cape Town’s water supply problems, drought problems leading to lack of food supply. Not to mention the other crime and political problems facing farmers. I would start making friends with international farmers of white maize (the staple food for the majority of the South African population), not just maize but any food consumed in SA, I think South Africa is going to be doing a lot of food importing in future, there are just too many problems that commercial farmers are facing, no business can survive long in that environment and stay competitive against competitors in stable countries whose government are protecting and subsidising their farmers, it is too difficult. Everybody needs food to survive and it needs to be constantly replenished.
Looking ahead
I am even a step ahead of that. I have personally started researching therapeutic foods, foods that are used for feeding malnourished people or distributed during a food crisis. My logic is that if food needs to be imported then we are at the mercy of the US Dollar – the currency of global trade. If the rand is weak against the dollar (every country that has done what the South African government is planning to do has faced hyperinflation which will erode the value of the local currency) this will push up the cost of food, making it too expensive for poor people to afford (the majority of South Africans are poor). If the World Food Programme (the UN agency that provides food assistance) or other humanitarian agencies steps in. I will be ready to supply them with Plumpy’nut, BP-5 Compact Food, High energy biscuits and Nutribuns. While it might seem like an unlikely outcome, you have to look at all scenarios to find opportunity that others may miss and history has shown us that this outcome is not outside the realm of possibility.
So if you want to stay ahead of the competition, start examining weather patterns or what has happened to other countries that has walked the path that the South African government wants to walk. You will become known as the go-to person to solve that problem.
Where to find products
The most popular place to find a product to import is on B2B portals, Alibaba is the most popular but most countries have their own portal where local suppliers (in that country) list their products that is available for export (and importing into another country).
Let’s say you are an aspiring sock designer, you know that these premium colourful bamboo socks are in fashion now. You visit your overseas competitors websites and you see that they mention the socks are made in Turkey, so you will look for sock designers in Turkey who you can send your designs to and you can start with a sample that can be sent via DHL to you and then you make a bigger order to be shipped in a cheaper method.
Importing considerations
When starting to import you will need an customs code, then while this is not compulsory if you know what you are doing but it is recommended that you use a forwarding agent to help you navigate the legal framework, regarding duties payable on your products and whether there are trade agreements in place that you can take advantage of.
