SA’s best business opportunities right now include pet products and security, according to one top tech investor
Manuel Koser is one of the most successful tech investors in South Africa – he helped to establish a number of leading online pioneers including online fashion platform Zando, price comparison site PriceCheck, home delivery meal-kit platform UCook, auto-trader CarZar, and organic and natural store Faithful to Nature.
Koser, who moved to Cape Town seven years ago from Germany, co-founded the investment group Silvertree Internet Holdings. He believes that the company's success in investing in online businesses comes from recognising that the South African market is unique.
“We’re light years away from seeing smart cars driving on our streets. Our internet trends are coming from Bob-the-Builder business scenarios; entrepreneurs who [build a business from scratch after] identifying a gap in the market where consumers have genuine issues and are using the internet to streamline it.”
Here are some of the business opportunities and trends he is currently eying in South Africa:
1. Afro-centric products, like black dolls, are in demand on social media.
SA start-ups are taking advantage of the low cost of social media to sell their goods online rather than through store chains or traditional market platforms.
These are small-scale businesses that don't have enough budget to take up shelf space in stores. Koser points out there is a growing demand among African consumers long overlooked by global producers. For instance, those business selling clothes that fit the African figure, or dolls that more fairly represent African people are using Facebook and YouTube to promote their products rather than traditional means.
Read: These Joburg entrepreneurs have defied the odds by creating truly South African dolls with realistic natural hair - and they are selling out everywhere
2. Online subscription businesses will keep booming.
Whether it is a TV subscription or a music service, South Africans are showing more interest in streaming subscriptions. On the top of the list would be Netflix with a 25% subscription growth, followed by a 43% for the New York Times, and 43% for Spotify.
“Subscriptions are picking up, Netflix has 300,000 users in SA and steadily growing. Spotify has entered the South African market and is slowly gaining traction,” said Koser.
“The next phase will be to provide bundled services, cramming multiple apps into single packages and giving users discounts for subscribing to multiple apps at once.”
3. Virtual voice home assistants will be big.
In the 1990s it was the desktop, in the 2000s cell phones and in 2010 mobile apps. The next big boom will be household appliances that can be operated with your voice.
“Looking at the ecosystem and looking at what will have the most impact on people’s lives at home. We can see the potential in ‘voice’ becoming the next big platform,” said Koser.
It’s a matter of time before we all have a device in the home that can speak English, Zulu, or isiXhosa, and order our shopping for us, he believes.
“Speech recognition has reached 95% accuracy, mainstream is now adopting virtual assistants. Amazon's Echo, the second generation Alexa, install base went from 10 million to 30 million in a year. Voice has shown growth as a new platform,” he said.
Hot on its heels is tech which integrates augmented reality, artificial intelligence, machine learning, and virtual reality – all set to be key drivers in industry development.
4. SA is shifting to niche e-commerce for pet accessories, groceries, and luxury watches.
South Africans are becoming more used to the idea of buying their goods online. Koser believes that in the next five years businesses that provide niche products – organic foods, exclusive accessories, ready-to-cook-meals, pet food – will benefit, though not necessarily by people who go searching for their websites.
“Instead, consumers are migrating to social media to buy those niche products like organic food and pet sitting," he said.
Aumax, a luxury watch selling business started by Sakhile Maseko, is one such store that sells luxury watches door-to-door with a ‘try before you buy’ system.
5. Two industries on the cusp of big change: insurance and security.
Koser believes insurance and security are both primed for disruption.
“Home automation security, this is a potential market for South Africa to exploit is the security space. Affordable digital home security systems are cheaper and accessible... I can buy a camera system from Amazon, install it myself and use an app to monitor it for cheaper than it costs to install security systems in my house,” he said.
South Africa has one of the largest private security forces in the world, which makes it an ideal location in which to develop systems for the rest of the world.
Security apps that act as call centres are becoming more and more popular. The emergency app Namola is one example and is proving to be popular in Soweto.
Insurance is also ripe for disruption says Koser. Not only is AI and machine learning helping to streamline the complex algorithms involved and cut down costs, it’s becoming more personalised. Sites like Compareguru offer consumers comparative insurance data to make informed decisions for vehicle, home, building and life insurance offering across a myriad of insurance service providers.
The insurance app Pineapple, which won Best Consumer App at the 2018 MTN Business App of the Year Awards, is one of the forerunners. It allows the user to upload images and create a database from a phone. The more items you insure, the cheaper the premiums get.
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