Dropshipping in South Africa: What is it and where do you start?

Dropshipping in South Africa: What is it and where do you start?

Dropshipping.   You’ve heard the term used before.  It’s the concept of selling someone else’s product, but not actually fulfilling the order.  The seller passes the order on to the manufacturer or supplier to fulfil orders directly to their customers.  The biggest difference between dropshipping and the standard retail model is that when it comes to dropshipping, the person marketing and selling the product doesn’t own the inventory. 

Here’s an image to explain how it works:

Drop shipping Logistics illustration

Advantages of Dropshipping

Upfront Costs.  As an online retailer, you have a virtual store and dropshipping allows you to have a virtual inventory too.  This way, you don’t have to outlay mountains of capital to buy products in bulk or meet minimum purchase requirements and you don’t have any warehousing costs either. 

Bulky Items.  Certain product types lend themselves to dropshipping, especially big or bulky items.  These items are expensive to receive, store and ship back out, so it makes a lot of sense to dropship them straight from the manufacturer.

Location.  The location of certain suppliers can also provide a geographic shipping cost advantage for you. 

Dropshipping and Shopify.  Shopify makes it really easy to make sure your orders get to your drop ship supplier.  Your dropshipper will receive the order information as soon as an order is placed and lets your supplier know to send items.  There are even apps that will let you sync your inventory with your dropshipper.   

Problems with Dropshipping

It’s costly.  Usually an inventory based retailer pays less per unit than a dropshipping retailer for the exact same product and this can mean that your retail prices need to be higher as a result.   

Product Limitations.  Sometimes suppliers will not offer their full range of products for dropshipping.  The product could be a fast mover and they know that they can move the product without dropshippers.  Or, on the other hand, the product might be too big to move or they don’t actually manufacture the products themselves, so they don’t put it on the dropship product list.

Higher fulfilment costs.  When you dropship, you not only pay the real cost of stocking, picking, packing and shipping the product to your customer, but you also pay a hefty markup which means dropshipping costs scale as your sales grow.  When you stock products yourself, you have a lot more control over these costs and can work on ways to bring these costs down. 

Customer Service Issues.  Dropshipping requires at least twice as much customer service work on every order and problems with orders are more difficult to sort out, as you have no control over the fulfilment process.  Some manufacturers’ and wholesalers’ internal systems are also quite cumbersome to work with and this will increase order processing time. 

Lack of local dropshipping suppliers.  Dropship suppliers in South Africa are difficult to find.  Many South African businesses are not informed about or are not prepared to dropship for you.  Those suppliers that are prepared to dropship are also generally not the physical manufacturer of the products, which leads to higher costs per unit and ultimately a more expensive product. 

Dropshipping is a relatively new idea in South Africa, but one that is growing steadily.  Our top tip if dropshipping is something you want to do: find local suppliers.  Local suppliers can generally ship faster and more affordably than international ones and they are generally easier to work with in terms of pricing, stock, etc.  There will also be fewer surprises when it comes to taxes, logistics, payment and business etiquette with a local supplier. 

Are you a dropshipper in South Africa?  Email your tips to us at marketing@uafrica.com or add a comment below. 

20 Responses to “Dropshipping in South Africa: What is it and where do you start?”

  1. Ken May 7, 2017 at 7:48 am #

    Hi, I would like to know if there is a Dropshipping Association in South Africa or a place where Dropshipping is taught.

    • marketing May 8, 2017 at 9:47 am #

      Hi Ken. You can read about Dropshipping on Shopify’s website although it will be more internationally focussed. There isn’t a South African association as far as we know, but if you do enough online and phone research you should get a better picture of how the industry works in SA.

  2. Mthobisi May 15, 2017 at 3:38 pm #

    do we have more South African Based companies who do this I only know 3. can you mention some of them here please.

    • marketing May 19, 2017 at 10:33 am #

      Hi Mthobisi. Unfortunately South African drop shippers are few and far between as the concept is still quite new. If you know of any dropshipping companies please feel free to let us know, so we can pass this information on to our users.

    • Azeez June 9, 2017 at 4:35 pm #

      Which 3 if I may ask?

      • marketing July 10, 2017 at 1:45 pm #

        Hi Azeez, here are three dropshippers to think about, but not all are based in SA: Parcel Ninja, and Efinity, but from what I understand Efinity isn’t accepting new customers. You can also try bwcs.co.za – Brand Warehouse. They store, pick, pack and despatch, but for slightly larger scale businesses. Their pricing is great though. You can also try Oberlo.com.

    • Zaks June 14, 2017 at 10:43 am #

      Hi Mthobisi

      Would you be so kind to let us know which companies you are aware of you does DS in SA? Im also searching high and low.

      • marketing July 10, 2017 at 1:42 pm #

        Hi Zaks, The only 2 fulfillment warehouses in SA that we know about are Parcel Ninja, and Efinity, but from what I understand Efinity isn’t accepting new customers. You can also try bwcs.co.za – Brand Warehouse. They store, pick, pack and despatch, but for slightly larger scale businesses. Their pricing is great though. You can also try Oberlo. They work with AliExpress and other suppliers to help merchants obtain products and then deliver those products to the merchant’s customers.

  3. Wikus June 20, 2017 at 1:40 am #

    What are the legal aspects of dropshipping from international suppliers? I also need some clarity about tax, do I need to add VAT? Let’s say for example I have a supplier in the US and someone outside of South Africa buys their product listed on my website or any other e-commerce platform? What does SARS expect from me? I can’t seem to find answers online. Feedback would be a huge help.

    • marketing July 25, 2017 at 1:29 pm #

      Hi Wikus,

      There’s a section in the SARS website called Customs and Excise that has a lot of info regarding what you’ll need. Hopefully this helps.

  4. Hilary July 3, 2017 at 1:38 pm #

    I’m interested in starting a drop shipping operation. Is it best for me to keep my entire drop shipping operation local, ie. find manufacturers in SA, and drop ship within SA only, or source manufacturers both locally and internationally and drop ship both locally and internationally?

    • marketing July 10, 2017 at 1:40 pm #

      Hi Hilary, I’d say do both. If you have the capital and time available then you’re perfectly positioned to dropship locally and internationally, however you might want to start locally and take it from there.

  5. Tochukwu Eze July 15, 2017 at 9:51 am #

    I love this topic because its what I really need right now, but the problem Imhaving right now is how to get the EIN or tax id, some of them need this how can I get this without been in the US, since its only given by only to US states what do I do?

    • marketing July 25, 2017 at 1:28 pm #

      Hi Tochukwe,

      We’re not too sure what you’ll need to drop ship in the US unfortunately. Try checking out internet searches and getting in touch with US based shipping agents to find out more info on how to get the EIN number.

  6. Thomas July 23, 2017 at 8:12 pm #

    Hi Im new to dropshipping I wanted to know if I dropship internationally e.g from China to the USA,but Im based here in South Africa,do I need to register my dropshipping business here in South Africa or abroad or I dont need to and how can I go about setting up my taxes,and do I have to pay sars on my international earnings.Thaank you

    • marketing July 25, 2017 at 1:27 pm #

      Hi Thomas,

      We don’t know all the ins and outs of dropshipping in SA in terms of taxes, so the best would be to head over to the SARS website to find out exactly what you need to set up. There is a section on Customs and Excise which seems to have all the info you’re looking for.

  7. Niki August 3, 2017 at 9:11 pm #

    Hi..
    I have just started dropshipping from China, and unfortunately have not had any good experiences to share. Firstly the shipping costs are extremly high..sometimes even more than the product itself Secondly if the customer chooses the cheaper shipping option which is to the post office, then you have to hope that the post office tracks the parcel correctly and informs the customer. Lastly, the duties and taxes are expensive and can amount to about 50% of the invoice amount … I am now questioning the entire system..especially in SA..i would love to hear from more successful dropshippers.

    • richard reid August 23, 2017 at 10:33 pm #

      Hi Niki, Im keen to connect to chat about drop shipping within Africa, Im also looking into the idea having imported goods already, just need to get beter systems in place. If you like to chat email em rjrtoulmins@outlook.com

  8. Brett August 23, 2017 at 5:31 pm #

    I also wanted to start a drop shipping business using US based suppliers. I managed to get them to take me seriously, but when I looked further at the logistics and potential pitfalls of drop shipping to South Africa using international suppliers, I decided against it. I went back to the drawing board and am now in the process of approaching smaller South African suppliers and stores within my chosen niche.

    I am slowly starting to win some of them over. It is not easy, but if you are persistent, professional and sincere, you will start to get noticed. My advice (and I am still learning) is as follows. One, have a website: one that works. Shopify is fantastic. Load some ‘mock’products using your chosen suppliers range. Second, make sure you can explain precisely how your supply chain will work. Most importantly, differentiate yourself. How can you add value to their brand? How can you marke ttheir product and drive sales for them? They also have a brand identity to protect. How can you enhance that?

    At the end of the day, business is about selling products. If you can demonstrate to suppliers how you will do that, then you will arouse interest.

    For anyone interested in drop shipping, there is NO SUCH THING as easy money. This is a lot of hard work. Forget about making R 90 0000 rand a month overnight. As with any business, it takes patience, persistence and a lot of elbow grease. I have been working on this for almost a year now, and am still months away from launching.

    Further, you need to network. Speak to people. My wife is there to tell me how nice my website looks. Check out Startup Grind and get out there and speak to people who can offer constructive advice and criticism.

    Good Luck!

  9. Digital Reason August 29, 2017 at 1:50 pm #

    Hi!

    I am currently operating a dropship business for the International market as it is much easier to locate drop shipping manufactures. They would usually not include their business name on the delivered items so that customers can never know that the item bought is being dropshipped.

    I don’t see how this should become a problem in South Africa. Many businesses buy their inventory at a low price and sell at a higher price. The difference is that dropshipping is digital. But as an online drop shipper, you also incur some expenses such a data usage, web hosting and time for running your business.

    I would also like to find out which manufactures can I use to dropship in South Africa.

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