How to Start a Buying & Selling Business in South Africa

A buying and selling business is one of the easiest businesses to get into; it requires little skill (besides basic mathematics) and can be started with very little capital.

The basics
There are two underlying components to a successful buying and selling business: 1. A place to buy products at a good enough price to be able to make a profit reselling and 2. A place to easily sell the products.

The “capital”
The first question is where to find the money to start? I always say start with what you have instead of waiting around for when you have or get enough to start your dream business. What do I mean in this case? Start with what you can come up with and use the profits from there to buy and sell higher value items. This money can be made from helping out wherever and saving it up, or maybe you saved up for clothing, use that money instead to start a business. There are numerous stuff that you can buy and resell with only a few hundred rand (and even less). There are a few tricks you could use to get payment for some products in advance before you order them, or get products on credit to resell. But they are both risky and will put you in interest bearing debt or put you in a precarious situation, which is why I always say start with as little as possible.

  1. Where to buy goods
    Sourcing goods is very important as one should try to resell something with as little competition in your market as possible. This does not only mean new items but could be shop-soiled items, refurbished items or any secondhand items.Here are some ideas:
    Buy from wholesaler or distributor and resell
    This is the most common of all, buying from an importer, wholesaler or distributor adding a markup and reselling.
    Example: Start a spice selling business

    Buying from auction and reselling.
    The nice thing about no reserve auctions is that you can often pick up goods cheap enough (providing there’s not too much competition at the auction) to resell. This often requires more money as well has transport but has a quick path to evolve into a sustainable business.
    Example: Buying and selling shop soiled goods

    Buying from secondhand shops and reselling
    This basically involves trawling Cash Converters and Cash Crusaders stores around your city looking for bargains that you can resell. Now I’m not going to lie to you, but there are not a lot of bargains to be found in these places as they often sell items for as much as the market will bear. But sometimes they have good sales. It does help to stick to and be familiar with a particular niche for example tools so you know when you find a bargain or rather how much you can sell the item for. But you can deviate from a niche if you can use common sense. For example, you see something that looks like a bargain; you can take out your phone and Google that item, and check what it sells for locally on secondhand marketplaces such as classified sites.

Buying locally and selling nationally
This involves buying on local classified sites, Facebook groups etc. and then selling it on national websites such as bidorbuy to someone in another province where that item will be harder to find (see “where to sell goods” below for more info).

Fixing and reselling
This involves buying a broken item, fixing it up and reselling it. This has the potential for the most profits of all strategies mentioned. But it comes with the risk that the item may take too long to fix or the part required cannot be sourced at an economical manner.

Buy from a manufacturer (someone making and selling goods)
This involves buying and selling items from someone who manufactures it, if you’ve even gone through Khoi Capital’s making and selling ideas, you might have thought to yourself, “I won’t really like making this but I feel I will be able to sell it”. Then this is for you. Find people making the item you want to sell, buy it at a wholesale price add a markup and resell it.

2. Where to sell goods
This is the second part of the equation. Where to sell goods. Firstly it depends on what you are selling. If you selling a commodity like food then you need to go where there are lots of foot traffic and people will buy food (go to the customer). But let’s assume you are buying and selling secondhand goods. The best place to resell locally within your province is a local classified service such as Gumtree, where people often turn to looking for goods. Some don’t turn to Gumtree in particular but they use a Google search to look for items and because Gumtree is so highly rated in a Google search they often show up at the top. Remember the yellow pages have gone the way of the dodo and people use Google instead for the purpose that the yellow pages once served.

Another place to consider selling on is bidorbuy especially selling to other provinces. What can happen is that a product can take long to sell on a local platform like Gumtree that is because that product is readily available in that area, but many people using bidorbuy live in small towns or rural areas where a variety of products are not readily available and what will not sell on a local service like Gumtree will sell on a national service like bidorbuy.

Business Models
This wholly depends on the product, if you don’t have any product yet, you need to decide whether you want to sell less, more expensive products (with higher profits), or more, less expensive products with less profit margin, this decision will also be also be influenced by your location. Selling a low margin item where there is little foot traffic and you won’t make enough to live on let alone prosper, you also cannot sell high margin items in areas where people cannot afford it. Another thing to consider is your current situation, how much do you need to make to survive, what are you current expenses, how far do you need to travel to suppliers, how far do you need to travel to the market. These are variables that differ person to person but you need to understand them as they are part of your strengths and weaknesses.