South Africa - Distribution and Sales ChannelsSouth Africa - Distribution and Sales
The areas in and around the cities of Johannesburg, Cape Town, Durban, Pretoria, and Port Elizabeth hold approximately 90% of South Africa's economically active population. These five cities represent the country's major areas of economic activity and consumer markets.
The distribution chain within a given industry varies depending on the nature and type of the imported equipment and/or products. For example, local subsidiaries or joint-venture partners distribute consumer-oriented products to a fixed number of distributors who sell to wholesalers and/or retailers who in turn sell to end-users. There may be more intermediaries within the chain, depending on the arrangement worked out by the original equipment manufacturer (OEM).
The traditional sales channels found in developed economies are also prevalent in SA.
Wholesalers - Established South African wholesalers often import industrial raw materials and/or consumer goods requiring maintenance of stocks.
Retail organizations - Many exporters of consumer goods sell directly to South African retail organizations, including consumer corporations, department stores, chain stores, and co-operative groups of independent retailers which assume the functions of wholesale buying, selling and warehousing.
Consumer Retail - South Africa offers the full spectrum of retail outlets: small general dealers; specialty stores handling a single product line (such as clothing, electronics, or furniture); exclusive boutiques; chain stores (groceries, clothing, toiletries, household goods); department stores; cash and carry wholesale retail outlets; and co-operative stores serving rural areas. Large-scale supermarkets, or hypermarkets, are located in suburban shopping malls and sell large quantities of almost all consumer goods. These stores domestically source about 90% of consumer trade inventories.
Franchises - Franchising is well established in South Africa, with the sector showing strong and continued growth. Around 30% of South African franchises are non-food systems, with an emphasis on service. Building, office and home services sectors are dominant, with automotive, restaurant, health, education, and training franchises also available.
After-Sales Agents - For products of a technical nature, it is advisable to appoint an official after-sales agent in South Africa. Ideally, this agent should not import or market the product in question, but rather, because of its geographical reach, technical ability, and goodwill in the market, it acts as the certified service agent. Appointing an appropriate after sales agent is crucial in ensuring that the product develops a respected reputation in the South African market.
Agents & Distributors - In South Africa, the terms “agent” and “distributor” have very specific meanings.
Agent: In the strict legal sense, an “agent” means a person who, for and on behalf of a principal, either introduces a third party to the principal by soliciting orders from the third party or concludes contracts with the third party on behalf of the principal. The normal reward for an agent is a commission, paid by the principal.
Distributor: A “distributor” buys and holds stock of a product. In return, the foreign firm usually grants the distributor an exclusive right to sell the product in an area or to a particular customer. An agreement with a distributor is similar to an agreement with an agent, except that price and delivery terms will differ because the distributor is a principal. When appointing a distributor in South Africa, the same considerations apply as when appointing an agent. These are (1) whomever the foreign firm appoints to be a distributor must to know the market well and (2) the foreign firm should consider the distributor’s ability to supply the product nationally given South Africa’s geographic size. South Africa is a large country, with nine provinces. Lacking the support of a national infrastructure, smaller agents often tend to operate provincially. This means that a parent company may need to appoint an agent in each of the larger cities -– Johannesburg, Cape Town, Port Elizabeth, and Durban -– to cover the country. Larger companies who take on agencies often have an office in each of the major centers, making any agency agreement easier to control.
In South Africa, each industry sector has a limited number of major distributors, but often hundreds of small distributors. Major distributors prefer an exclusive agent/distributor agreement with the foreign firm. The country’s largest airport in Johannesburg or one of three of the country’s ports: Durban, Cape Town, and Port Elizabeth handle most imports into South Africa. The major distribution point is Johannesburg, which has bonded inland port status for custom and excise purposes.
Johannesburg
The City of Johannesburg is the commercial hub of South Africa. As the country's transportation hub, it is the center for all aviation, rail, and road infrastructure. It also has the continent's busiest international airport, which can handle 20 million passengers and 400,000 metric tons of cargo annually. The headquarters of the National Ports Authority of South Africa (NPA) is also located in Johannesburg. Johannesburg is one of the world’s few major cities located on neither an ocean nor a major river. Yet it hosts the largest and busiest “port” in Africa – an export-import freight container terminal and bonded warehouse called City Deep, which handles 30% of South Africa’s exports.
Durban
Durban is the busiest ocean port in Africa, and the Durban Container Terminal is the largest and best-equipped container terminal in the southern hemisphere. Durban’s location on the eastern coast of South Africa makes the terminal a pivotal hub for the entire southern African region of the Indian and South Atlantic Oceans, serving trade routes linking North and South America with the Middle East, India, Asia and Australia. The terminal is a crucial interface for the distribution of cargos between ocean carriers and the markets of South Africa, Botswana, Zimbabwe, Zambia and the Democratic Republic of the Congo. On the landside, there is direct connection with surface transport via rail sidings and speedy connection to South Africa’s trunk road network. The facility handles more than 4,000 ships annually, with an estimated gross tonnage of 81,700,000. Containers handled at Durban port represent 64% of the total number of containers handled at South African ports. Durban port is currently undergoing extensive upgrades aimed at increasing both efficiencies and net capacity.
Cape Town
Cape Town, located at the southern-most point of Africa, is ideally positioned as a hub terminal for cargo to South America and the Far East. West/East Africa cargo has grown substantially, making the Cape Town Container Terminal the terminal of choice for trans-shipment cargo. The terminal currently handles 3,161 vessels per year for a gross tonnage of 44,501,297.
Port Elizabeth
The Port Elizabeth Container Terminal is one of the three specialized container-handling facilities along the South African coastline. Port Elizabeth serves the immediate area of the Eastern Cape, where its main business focuses on the needs and requirements of the motor vehicle and components industry as well as various agricultural products. The terminal offers value-added services in the form of storage, packing and unpacking of containers, and logistics management. The terminal currently handles 1,271 ships with a total gross tonnage of 25,756,823.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
The distribution chain within a given industry varies depending on the nature and type of the imported equipment and/or products. For example, local subsidiaries or joint-venture partners distribute consumer-oriented products to a fixed number of distributors who sell to wholesalers and/or retailers who in turn sell to end-users. There may be more intermediaries within the chain, depending on the arrangement worked out by the original equipment manufacturer (OEM).
The traditional sales channels found in developed economies are also prevalent in SA.
Wholesalers - Established South African wholesalers often import industrial raw materials and/or consumer goods requiring maintenance of stocks.
Retail organizations - Many exporters of consumer goods sell directly to South African retail organizations, including consumer corporations, department stores, chain stores, and co-operative groups of independent retailers which assume the functions of wholesale buying, selling and warehousing.
Consumer Retail - South Africa offers the full spectrum of retail outlets: small general dealers; specialty stores handling a single product line (such as clothing, electronics, or furniture); exclusive boutiques; chain stores (groceries, clothing, toiletries, household goods); department stores; cash and carry wholesale retail outlets; and co-operative stores serving rural areas. Large-scale supermarkets, or hypermarkets, are located in suburban shopping malls and sell large quantities of almost all consumer goods. These stores domestically source about 90% of consumer trade inventories.
Franchises - Franchising is well established in South Africa, with the sector showing strong and continued growth. Around 30% of South African franchises are non-food systems, with an emphasis on service. Building, office and home services sectors are dominant, with automotive, restaurant, health, education, and training franchises also available.
After-Sales Agents - For products of a technical nature, it is advisable to appoint an official after-sales agent in South Africa. Ideally, this agent should not import or market the product in question, but rather, because of its geographical reach, technical ability, and goodwill in the market, it acts as the certified service agent. Appointing an appropriate after sales agent is crucial in ensuring that the product develops a respected reputation in the South African market.
Agents & Distributors - In South Africa, the terms “agent” and “distributor” have very specific meanings.
Agent: In the strict legal sense, an “agent” means a person who, for and on behalf of a principal, either introduces a third party to the principal by soliciting orders from the third party or concludes contracts with the third party on behalf of the principal. The normal reward for an agent is a commission, paid by the principal.
Distributor: A “distributor” buys and holds stock of a product. In return, the foreign firm usually grants the distributor an exclusive right to sell the product in an area or to a particular customer. An agreement with a distributor is similar to an agreement with an agent, except that price and delivery terms will differ because the distributor is a principal. When appointing a distributor in South Africa, the same considerations apply as when appointing an agent. These are (1) whomever the foreign firm appoints to be a distributor must to know the market well and (2) the foreign firm should consider the distributor’s ability to supply the product nationally given South Africa’s geographic size. South Africa is a large country, with nine provinces. Lacking the support of a national infrastructure, smaller agents often tend to operate provincially. This means that a parent company may need to appoint an agent in each of the larger cities -– Johannesburg, Cape Town, Port Elizabeth, and Durban -– to cover the country. Larger companies who take on agencies often have an office in each of the major centers, making any agency agreement easier to control.
In South Africa, each industry sector has a limited number of major distributors, but often hundreds of small distributors. Major distributors prefer an exclusive agent/distributor agreement with the foreign firm. The country’s largest airport in Johannesburg or one of three of the country’s ports: Durban, Cape Town, and Port Elizabeth handle most imports into South Africa. The major distribution point is Johannesburg, which has bonded inland port status for custom and excise purposes.
Johannesburg
The City of Johannesburg is the commercial hub of South Africa. As the country's transportation hub, it is the center for all aviation, rail, and road infrastructure. It also has the continent's busiest international airport, which can handle 20 million passengers and 400,000 metric tons of cargo annually. The headquarters of the National Ports Authority of South Africa (NPA) is also located in Johannesburg. Johannesburg is one of the world’s few major cities located on neither an ocean nor a major river. Yet it hosts the largest and busiest “port” in Africa – an export-import freight container terminal and bonded warehouse called City Deep, which handles 30% of South Africa’s exports.
Durban
Durban is the busiest ocean port in Africa, and the Durban Container Terminal is the largest and best-equipped container terminal in the southern hemisphere. Durban’s location on the eastern coast of South Africa makes the terminal a pivotal hub for the entire southern African region of the Indian and South Atlantic Oceans, serving trade routes linking North and South America with the Middle East, India, Asia and Australia. The terminal is a crucial interface for the distribution of cargos between ocean carriers and the markets of South Africa, Botswana, Zimbabwe, Zambia and the Democratic Republic of the Congo. On the landside, there is direct connection with surface transport via rail sidings and speedy connection to South Africa’s trunk road network. The facility handles more than 4,000 ships annually, with an estimated gross tonnage of 81,700,000. Containers handled at Durban port represent 64% of the total number of containers handled at South African ports. Durban port is currently undergoing extensive upgrades aimed at increasing both efficiencies and net capacity.
Cape Town
Cape Town, located at the southern-most point of Africa, is ideally positioned as a hub terminal for cargo to South America and the Far East. West/East Africa cargo has grown substantially, making the Cape Town Container Terminal the terminal of choice for trans-shipment cargo. The terminal currently handles 3,161 vessels per year for a gross tonnage of 44,501,297.
Port Elizabeth
The Port Elizabeth Container Terminal is one of the three specialized container-handling facilities along the South African coastline. Port Elizabeth serves the immediate area of the Eastern Cape, where its main business focuses on the needs and requirements of the motor vehicle and components industry as well as various agricultural products. The terminal offers value-added services in the form of storage, packing and unpacking of containers, and logistics management. The terminal currently handles 1,271 ships with a total gross tonnage of 25,756,823.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.