Challenges of eCommerce Startups in South Africa

The eCommerce industry in Africa is booming.

The continent of 1.4 billion people is already the most significant region for mobile commerce and by 2026, Africa is forecasted to have the most significant growth in digital buyers worldwide. Within Africa, South Africa is one of the most thriving markets for eCommerce startups to thrive in, alongside Nigeria, Kenya, and Ghana.

Having said that, with the rise of eCommerce subscriptions, successfully building and sustaining eCommerce startups in South Africa can come with its unique set of challenges.

Fortunately, there are ways to overcome these challenges.

In this article, we’ll discuss some prominent challenges faced by eCommerce startups in South Africa, particularly offering or looking to offer subscription-based products and services. We will then offer solutions designed to facilitate market domination, particularly by leveraging the appropriate tech stack for your South African eCommerce business.

South African E-Commerce & The Rise of Subscriptions

Improved internet penetration, changing consumer preferences, the convenience of online shopping, and improved purchasing power have all led to the growth of South African eCommerce.

With subscriptions being the future of modern eCommerce, the local subscription economy which is currently worth $530 million is projected to be worth $820M by 2025. These numbers are a testament to the fact that subscriptions in South Africa are on the rise and are here to stay.

However, subscription based eCommerce startups in South Africa encounter several challenges that can be formidable barriers to success. Let’s dive into what they are and what you can do about them.

Challenge #1: Online Payment Related Distrust

One of the most significant challenges for eCommerce startups in South Africa is orchestrating a payment experience that is secure, trusted, and caters to unique needs in the African market. Recognized and trusted payment options such as mobile money and cash-on-delivery options can work to eliminate this for one-off sales.

However, to collect recurring payments, your consumer is required to put a payment method on the books to be charged at regular intervals. Your consumers need to feel safe from fraud while entering their payment details on your checkout form. Furthermore, your checkout flow has to be crafted to perfection in terms of its functionality, as well as its branding, to ensure a frictionless payment experience that keeps distrust at bay.

You have done your part.
Let SubscriptionFlow take it from here!

Let us help your business grow with our powerful
subscription management software.

Solution: SubscriptionFlow’s PayStack Integration & Branded Checkout

SubscriptionFlow lets you orchestrate seamless checkout flows by integrating with the best payment gateways in Africa including PayStack, PayFast, and Peach Payments.

PayStack in particular is a homegrown Nigerian startup, acquired by Stripe in 2020. Powering payments through PayStack empowers your African consumer to feel at home while also enjoying security at par with a market leader in the payments space (Stripe). This throws the element of distrust out the window.

The robust SaaS billing tool lets you automate recurring payments, manage subscriptions seamlessly, and offer flexible payment options to customers. It also lets you choose how to best serve customers through a variety of options such as embedded checkout or hosted payment.

You have the option to endlessly customize and brand the checkout experience, so your customer never feels hesitant or stranded on a web URL that makes them doubt their safety at any point.

Challenge #2: Failure to Retain Customers

Retaining customers is at the heart of the long-term success of any eCommerce startup. Unfortunately, eCommerce startups are often plagued by a high churn rate as they fail to stand out in the face of competitors and aren’t able to effectively plug revenue leaks from poor pricing strategies, payment failures, and a one-size-fits-all sales approach.

Without a reliable system in place to understand customer behaviour, preferences, and buying patterns, retaining customers can be an uphill battle for eCommerce startups in South Africa.

Solution: Data Analytics & Customer Segmentation

Tracking customer behaviour and segmenting customers for engagement and promotions can help carve out better retention for your eCommerce startup. This way you can personalize your interactions with customers and boost sales.

RetentionFlow offers valuable insights into customer behaviour with its usage tracking features and robust reporting and analytics tools. E-commerce startups in South Africa can then tailor their offerings and marketing strategies accordingly. Understanding customer preferences leads to businesses offering personalized subscription packages and promotions, ultimately boosting customer retention rates. It also lets you reward loyalty and deflect churn effectively.

Watch Now: Maximizing Customer Retention: Your Complete Guide to RetentionFlow

Challenge #3: Regulatory Compliance

Navigating the complex web of regulatory requirements and compliance standards in South Africa can be daunting for new eCommerce startups. Failing to adhere to these regulations can result in fines, reputational damage, and an inability to function, let alone grow.

Solution: A Compliant SaaS Stack

SubscriptionFlow is designed to help businesses stay compliant with local and international regulations. Whether it’s currency conversion, tax management, automated invoicing, or audits and reporting, this SaaS tool will make sure you don’t have to stress about the nitty gritty.

Furthermore, ample available integrations with accounting and taxation software make your whole tech stack operate harmoniously. This not only saves eCommerce startups time and resources but also helps them avoid legal pitfalls.

Challenge #4: Soft Decline Failed Payments

Internet connectivity issues in Africa can create revenue leakage from soft declines. Soft declines happen when there are glitches in the checkout flow such as those associated with poor network connectivity and payment processor/gateway unavailability.

A lot of revenue can be lost to failed payments if you don’t have a system in place to recover them. Furthermore, this type of friction hikes up your cart abandonment rate and becomes an obstacle to scale.

Solution: HPPs & Smart Dunning Management

Soft declines are caused by bad timing and internet glitches. They can to some capacity be prevented by setting up a hosted payment page or HPP which as the name implies are hosted separately from your website. This means that even if your website server is down, once checkout is initiated it can proceed smoothly.

When payments fail, they can also be recovered by retrying the payment at another time. SubscriptionFlow lets you automate personalized workflows for payment collection and dunning management.

Read Now: Achieve Your Dunning Benchmarks with SubscriptionFlow

Final Thoughts

In conclusion, while the South African eCommerce landscape is ripe with potential, startups inevitably face numerous challenges on their path to success. SubscriptionFlow, the best eCommerce platform for startups, offers a comprehensive solution to these challenges, enabling eCommerce startups to streamline their operations, eliminate distrust, improve retention, and collect failed payments.

As eCommerce startups grow, their operations are bound to become more complex. By harnessing the power of SubscriptionFlow, eCommerce entrepreneurs in South Africa can unlock their full potential and thrive in the competitive online marketplace.