South Africa’s Online Retail Industry grew by 40% during the Covid-19 Lockdown.
Each of these online businesses face rules and regulations, some of which the owners of these businesses are sometimes blissfully unaware of.
Even larger online retailers struggle to follow the rules and regulations governing their businesses.
Online businesses do not differ much from brick-and-mortar businesses. There are a few differences here and there, but the core principles stay the same.
Starting an online business in South Africa is almost too easy. Starting a successful and compliant online business on the other hand, requires a bit more blood, tears and sweat.
Basic Steps to open an online business:
- Decide on the type of entity.
- Register your company.
- Open a bank account.
- Register a web domain.
- Set up your website.
- Draw up standard terms and conditions.
- Start trading.
1. Decide on the type of entity
The first thing to decide when you want to start an online business (or any business), is whether you will be trading as a sole proprietor, partnership, or company.
A company offers protection for the owners’ personal assets, so our advice to anyone asking, is to trade as a company rather than as a sole proprietor or partnership. You do not want your personal assets to be exposed to the debts and liabilities of the business.
2. Register your company
Registering a company is quick and easy. Visit BIZPORTAL* register an account, deposit monies to your account, and register your company.
From experience, your company can be registered within a day.
3. Open a bank account
You will want to keep your personal money separate from that of the business. This way, you will not spend the money that you need in your business to keep the business running, buy stock, pay expenses, etc.
When registering your company on BIZPORTAL*, you can also open your bank account at any one of the mayor banks.
Be sure to check the bank charges of each bank before you decide with which one to open an account.
4. Register your domain
Next on the list is to register a domain and sign up for a hosting package to host your emails and/or website.
You will need a professional and personalised email address if you want to be taken seriously. A free “gmail” or “outlook” account is for hobbyists, not serious businesses.
You can register your domain on BIZPORTAL* as well, but you will still need a hosting package from an Internet Service Provider (ISP). Most ISP’s offer free domain registration with hosting packages, so you will save money by registering your domain when you sign up for hosting package.
5. Set up your website
You will want a website that offers a good searching experience, lists your products clearly, and accepts online payments. You do not want customers to leave because they couldn’t find what you offer, and you don’t want to follow up on orders to finalise EFT (Electronic Funds Transfer) payments.
6. Get good terms and conditions
Next, you need good standard terms and conditions, and if you sell products, a shipping and return policy as well.
This is the least glamourous step, but without good terms and conditions, one bad transaction can sink your whole business. So please do not neglect this important step of setting up your online business.
The two most important Acts applicable to online businesses are the Electronic Communications and Transactions Act and the Consumer Protection Act. Familiarise yourself with these two acts, and make sure your business and terms and conditions are not in contravention thereof.
7. Start trading
Once your company is registered, your bank account is open, your online presence and ecommerce website is set up, and your terms and conditions are in place, you can start doing business.
Most new online retailers focus only on setting up the website and neglect the rest of the important steps.
The steps you take to open your online business, will determine whether you will be recognised as a true online business, or merely an online hawker.
When last did you buy something from a hawker, paid with your credit card and read the return policy on the back of the receipt… never!
With a 40% growth in online retailers just during lockdown, the competition out there is cut-throat. You need to differentiate yourself if you want your online business to be a success.
Our steps do not guarantee success, but it shows that the more effort you put in, the better your chances of success will be. You can add a few more steps to our steps and create a social media page to spread the word. Just remember, that a social media page cannot replace a website. A social media page, without a professional email account and without linking to a website, looks like a swindle and nobody will take you seriously.
Opening an online business is easier than opening a physical shop, but it should not be. Successful businesses are successful because it takes time and effort to create success.
We wish you all the best in your journey, and remember, we are always available should you need any assistance in opening your online business. We have helped many online businesses, from registration of the company, hosting and setting up the website, drafting terms and conditions, etc.
*The service providers referred to are only examples. We do not promote or specifically recommend any of them. Feel free to choose your own service providers to fulfil your needs.