Selling and Operational Adaptation in South Africa
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Selling and Operational Adaptation in South Africa
Apart from adapting to the South African culture, you may find yourself having to reassess the way you traditionally operate and conduct business. Here are some things to think about when you're planning:
- Will you be able to easily obtain the raw materials you require?
- Will you be able to import all the materials you need?
- Will you be able to find skilled workers in South Africa?
- Will you be able to take current employees, if needed?
- Are you obliged to employ nationals?
- Are you prepared, if necessary, to increase workforce and productivity?
- Are you familiar with the laws, regulations and trade barriers that could affect your business?
Selling and getting your goods to market
To improve the chances of successful business expansion in South Africa, you need to consider a few key issues. Sales presence, for instance, should be a top priority. Will you sell directly? Will you trade over the internet? Perhaps trade shows are more suitable? Could you benefit from a local partner who knows the market? Here are a few fundamental choices:
- Get yourself a South African distributor who has a proven track record of selling on a local or national level.
- Find sales agents who can either sell your products or services, or alternatively acquaint you with potential clients or customers.
- Joint ventures with local companies have gained in popularity, primarily because of their knowledge and established presence in the market. It is often a pricey option but lessens the risk.
- Set up your own South African office, ensuring maximum control on all operations. This is obviously the most expensive of all your options.
When considering the distributional needs of your business, it is essential to account for the logistical factors which could affect it. These include things, such as:
- Your goods: are they fragile, expensive, perishable? Do they need to be kept at a certain temperature?
- Are your goods live, or considered dangerous, and, if so, can you meet the requisites of customs and excise, or health and safety?
- How regularly will you deliver? Daily, weekly, monthly? Can you find a distributor who can accommodate this?
- Can you foresee the dates / times you'll need to distribute?
- Have you worked out the transportation costs? Air freight and couriers are fast, but also the most expensive forms of freight.
- Reliable and invariable collection and delivery times, which offer accurate predictability and time-traceability
- Awareness of transit times so you can plan around them
- Freight security
- Fuel price fluctuation
- Effect of congestion or delay
OR Tambo International Airport (formerly Johannesburg International) is the busiest airport on the continent - and the air transport hub of southern Africa.
South Africa's major ports and harbours are Cape Town, Durban, East London, Mossel Bay, Port Elizabeth, Richards Bay, and Saldanha Bay. In 2006 the new port is to open: Ngqura, at Coega, which is 20 km northeast of Port Elizabeth. The administration and operation of the country's port facilities is done by two subsidiaries of Transnet, the Transnet National Ports Authority and South African Port Operations.
Warehousing is available in most main cities, offering flexibility and speed of delivery. However, legal advice in South Africa should be sought before entering into any agreement.
Traditionally, wholesalers are used for selling low-value directly to retailers and, occasionally, the public and businesses. It is an economic way of targeting and reaching vast numbers of people quickly, and frees you from the burden of contacting retailers individually.
Distributing products in bulk not only means products sell faster than one-at-a-time, but it also allows your business to grow at a quicker rate.
Dispensing products and collecting money is generally considered more manageable and easy than dealing with a variety of customers. However, both the wholesaler and retailer will add their own mark-ups, meaning your profit margin will be less than full potential.
Just like with distributors, do some meticulous research into the wholesalers available. Here are some things to think about when choosing an appropriate wholesaler:
- Their client base: a healthy wholesaler-retailer relationship can only increase sales
- Will you want to limit sales only to retailers that suit your product's image?
- How well-established is the wholesaler? A national presence could help bring your company to the forefront of the market
- Will the wholesaler appreciate your product? If it already sells a competing product, how will it negotiate pushing yours too?
- Will you have a say in the price the wholesaler sets for your goods?
- Will the wholesaler do its best to promote your goods to its clients?
- How will the supply exchange operate? Minimum order levels / resupply?
- Will you be restricted in any way, such as limitation on distributing through alternative channels?