Dropshipping Creates Novel Online Business Opportunities For The Long-Term Unemployed In South Africa (And Others)
Dropshipping - memorably described by Sirin Kale in Wired as people selling products they've never handled, from countries they've never visited, to consumers they've never met" - is one of the best examples of pure" Internet activity around. As Kale explains:
Dropshipping is a fulfilment" method. At one end of the supply chain, an entrepreneur identifies a product - usually through Chinese e-commerce platform AliExpress - which they think they can sell to European or American consumers. They create a website using Shopify, and identify and target buyers, typically using Facebook ads, although you will find dropshippers on other platforms, including Instagram, or selling through marketplaces such as online homeware store Wayfair.
A key feature of dropshipping, and one reason it is attractive to its practitioners, is that products are sourced without creating an inventory. However, the opaque nature of dropshipping ecommerce means there is plenty of scope for customers to be ripped off by someone along the supply chain, with little hope of redress. In Kale's 2020 Wired feature, there was already a sense that it was a fad whose moment had passed, and that the smart dropshippers were getting out and moving on. That makes a post on the Rest of the World blog about the rise of dropshipping in South Africa particularly interesting - and hopeful:
A marketing graduate from the University of Lilongwe in Malawi, [Saba] Mika moved to South Africa in 2018 with the hope of finding a job that matched his qualifications. After two years of a fruitless search, he decided to become a drop-shipping agent. Drop-shipping is an easy way to make money," Mika told Rest of World. For those of us who cannot find work, it has become a way out of poverty."
Since nearly 32% of South Africa's population is unemployed, according to the Rest of the World post, dropshipping represents a rare opportunity to make money independently:
the 36-year-old [Saba Mika] spends around five hours each day taking screenshots of trendy clothes and shoes from Chinese e-commerce websites, sharing them on Facebook Marketplace and WhatsApp groups, and ordering the goods if he receives any orders. Over the past two years, Mika has made up to 20,000 rand ($1,074) in a good month.
Dropshipping in South Africa is not without problems. Unlike general dropshipping, in South Africa it seems to serve mainly the domestic market. That means a lot of Chinese-made products are flowing into South Africa, including plenty of counterfeit items:
In 2022, online retail in South Africa crossed 50 billion rand ($2.6 billion), fueling the popularity of drop-shipping. But there are concerns about Chinese counterfeits - which currently account for up to 10% of the South African economy, according to the Consumer Goods Council - and growing worries over Chinese brands making South Africa their dumping ground.
The South African Revenue Authority is concerned that these Chinese imports may not meet South Africa's safety, regulatory and health standards. Another issue is that goods brought in by dropshippers aren't paying custom duties when they enter the country. Siphithi Sibeko, head of communications and media for the South African Revenue Authority, pointed out to Rest of World that, as a result, These goods also undercut the industry, causing unemployment and exacerbating poverty and inequality."
Dropshipping is clearly not a panacea. But it is a good example of how the Internet has created novel business opportunities with extremely low barriers to entry. That's important for people who, like the long-term unemployed in South Africa, have only minimal resources at their disposal.