Advantages brought by COVID-19 for small businesses and economic growth

Perhaps one of the earliest good stories for startups and small businesses in South Africa in the lockdown was the grocery delivery app getting R30 million funding from an ‘unnamed’ JSE listed company.

I was happy that a South African company – or a JSE listed company – invested in a local company with a black founder, well, because, corporate South Africa has scared money. 

They don’t invest in local innovation. They themselves don’t apply any effort in being inventive and innovative products wise. They just buy stuff from China and sell them to us.

The story signified that yeah as a country we are moving to that future where we are fast embracing the Internet of Things of the Fourth Industrial Revolution.

World Wide Worx in 2016 estimated that our internet penetration is at 40% of the population.

In 2019 World Wide Worx said online retail in South African reached 1.4 percent – i.e. R14 billion – of the total national retail.

To juxtapose, 80 plus percent of Americans shop online.

Our e-commerce penetration is thus low as is and in comparison.

The other good news about the COVID-19 lockdown is we saw several startups launch big.

Rich Mnisi dropped several ranges and it seems a lot of people bought them per the social media posts (people wearing the clothes actually).

Hermosa Flor Cosmetics by Mbali Sebapu – known as Gorgeous Mbali – sold out 80% their #lilycollection in less than an hour and made over R100 thousand in net sales.

I saw authors Jackie Phamotse and Takalani M selling a lot of books via websites.

All in all, I am seeing a lot of people posting pictures of products they’ve received via courier – and they bought them online obviously.

Without being mathematical and percentage-wise with it, more people are buying online than before in this lockdown.

I’ve had a few conversations with courier people who were delivering packages to me. They say their work has gone up and thus they love because it means more money for them.

The advantages brought about by COVID-19 for startups and small businesses

The COVID-19 lockdown has exponentially fast-tracked a plausible forecast I made and wrote about in 2015: 2 Ways for Africa to Grow Exponentially The theme that internet and courier will be a gateway to advancing the growth of African small businesses, and exposing them to the world.

It is simple as adverting products online and reaching anyone in the world, especially the western countries were they have a high e-commerce penetration.

If we make products that people love, they will buy them.

Even here in South Africa before COVID-19, if a product was hot and the only way to get it was via e-commerce (either through a website or via email or WhatsApp – the later is also e-commerce), people bought it.

Bathu is the perfect example in the small businesses category. People bought their shoes via WhatsApp and even before they had physical stores.

People buy because they love something. When people want something badly and it is only available online, they will go online to buy it.

So ours is to create great products.

COVID-19 has forced people to embrace e-commerce. Importantly it has forced people who traditionally would not buy online to start transacting there.

Here are the advantages COVID-19 has brought forward for new startups and small businesses.

1.      Decreased cost of entry barrier

With e-commerce it means Lesedi in Matatiele can create a great product at home, build a website and ship it to anywhere in the country, on the continent and the world.

She can manufacture it herself or outsource.

She has just avoided physical shop costs and overheads.

2.      Increased online orders mean a gradual decrease in courier costs

As more and more people buy online, courier costs reduce.

Imagine a case where a few years ago a courier would go into a township to collect or fetch one parcel – that was expensive.

In 2020 courier vans collect and deliver a lot of parcels in townships. I’ve observed the reduction in costs personally.

Between 2009 and 2020 I’ve sold various products online (e.g. clothes, books) and I’ve seen the decrease in courier costs.

Also, there is competition and new entrants to the courier business. It reduces costs.

– – – –

Tiisetso Maloma’s books are available in South African bookstores and on Amazon

  1. The Anxious Entrepreneur
  2. Forget the Business Plan Use this Short Model
  3. Township Biz Fastrack
  4. Township Biz Adjacent
  5. Tales of an African Entrepreneur