What we learnt from being a partner to an incubator program

Our business, Hooros Digital was recently given the opportunity to become one of the technical partners for E-Squared and Allan Gray’s accelerator program for Allan Gray Orbis Fellows — The E-Squared Elevator. In conjunction with other specialists and impressive service providers we have been tasked with the role of helping these ventures through this incubation program.

We were particularly chosen to assist in the scope of digital and technical strategy and implementation, entailing implementing the technical requirements needed to help to help the ventures scale through marketing, CRM and developing a digital touch point for consumers to for example, purchase products from the given customer.

Although the program has just recently commenced we have learnt quite a bit about the challenges that SMEs face. Digital marketing for example appears to be seen as an afterthought — a ‘by the way’ feature. This is understandable given that traditional marketing remains the predominant method of reaching out to new customers in South Africa. However, it ignores the growing reach of digital marketing tools; Facebook (with 15- 20 million monthly actives), Google (14.1 million reach) and YouTube, and ignores the measurement feedback that comes from digital marketing which brings along better targeting and A/B testing to better formulate a message that resonates with your target market.

When it comes to e-commerce strategy, building an e-commerce site can, in many cases, be replaced by setting up a Shopify store, which not only gets you a decent looking site at a fraction of the cost and time, but also allows you to easily integrate payment options and distribution channels to better deliver your products to your target audience.

While exporting goods to other countries seems to be a priority (both within Africa and abroad), distribution seems to be a challenge. There is the question of how do you distribute your products to buyers in different African countries without the requisite capital to set up distribution points. A potential solution to this may involve becoming a merchant to existing Pan-African e-commerce retailers. Platforms such as Jumia and Kilimall have a large presence in Nigeria, Tanzania, Kenya and other Sub Saharan Africa countries. Becoming a merchant on these platforms helps to ameliorate the distribution problem by leveraging their existing distribution channels, partnering with other niche e-commerce ventures operating in your vertical or an ancillary vertical and finding a bulk distribution deal, or taking your package of products for resale to Pan-African e-commerce retailers such as Jumia and Kilimall. Jumia in particular, seems to have a relatively easier merchant onboarding process and probably the largest penetration rate amongst all e-commerce platforms in Africa.

Serious questions can also be raised about prioritising exports as a relatively small venture in an incubator. Again, this largely depends on the product being sold. Different countries exhibit different buying behaviour, price sensitivity and preferences. From an anecdotal perspective, I know that a dual SIM card cellphone developed by generic manufacturers were actually a big seller in Zimbabwe, particularly amongst the rural population and people with lower income levels because store owners charged a premium on your ‘conventional’ smartphones (e.g iPhones etc), making it a more popular choice amongst this market segment. Understanding the nuances in different markets can provide an opportunity for successful expansion.

Using data from Google Keyword planner may help paint a clearer picture of market size based on estimated search volume. Further analysis of this data could potentially help you reveal search trends indicating how users are finding similar products. How users search says a lot about; their pain points and how to reach out to your market. This data could also help you develop an understanding of potential product upsells based on search trends. If for example you sell babies’ toys you may find high search volume for accessories related to said toys (e.g doll accessories). This may indicate a potential opportunity to focus on toy accessories as an upsell. To cut a long description short, depending on your business model, Google keyword planner can be used to guide your product strategy. It goes without saying that this will also impact your pricing strategy as it gives you a clearer understanding of what you are likely to spend to acquire a customer, particularly if you track the percentage of customers coming through your ads who actually convert to paying clients.

This has been a learning experience for Hooros Digital while we continue to better understand our potential market and redefine our business to be a one stop shop for companies and SMEs looking to build technology that helps them scale through a cost-effective, freelance and project management-based model.

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