Transporting goods across South Africa is not a task one undertakes lightly. Although South Africa’s infrastructure is designed around the road system, knowing where to begin when moving items, especially across country, has long been the case of picking up the phone or a Google search with mixed results.
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From there, getting quotes, agreeing to insurance, and holding people accountable often proves a tricky affair. For one young founder, Emile McLennan, who one day needed to transport his motorbike from Durban to Cape Town, the current system is all wrong. “I have the business, why should I do all the work of finding these companies, surely they should contact me?” McLennan tells Ventureburn.
And that’s when the idea for McLennan’s new online marketplace, eShip, came about. In a sentence, eShip connects people who need things shipped with the local transporters who have the capacity to fulfil those shipping requirements.
So let’s take a look at how it all works:
http://www.youtube.com/watch?v=1x3Gm9yFJqQ
- You post your free listing on eShip.
- Various transport companies will respond with bids (quotes) to win your business.
- You accept the bid you want based on price, delivery time and reviews of the company on the eShip platform.
- You pay 50% of the fee up-front through the eShip platform.
- The transporter delivers the goods, you pay the remaining 50% to the transport company directly.
- Both you and transporter exchange feedback on eShip to help build each others’ reputations.
The system is reminiscent of Uber, which functions as a mobile platform linking high-end private cars to people needing a ride, only this time it’s a platform linking freighters with people who need to move items that are too large for the post office and regular courier companies across varying distances.
eShip’s revenue model differs slightly though. Listings are free, but transporters pay a membership fee of R156 per month, billed annually. This can be reduced to R112 per month if a five-year plan is taken though. eShip also takes a small fee on a successful bid based on a tier system depending on the cost of the job.
This fee varies from 5% (listings of R60 000 and up) to 12.5% for listings under R1000. According to McLennan, eShip’s fees are much lower than what transporters would normally have to pay to freight brokers. For example, on a listing of R19 000 on eShip a transporter will pay R1730, about 9% — a freight broker’s fee would range from 20% and upwards for the same value.
What’s most impressive about eShip is that McLennan is only 18 years old, and eShip is his second company! He started his first business, an online retailer for health products and sport supplements, at the age of 16 and sold it later to an entrepreneur involved in the courier industry. The proceeds from that deal went towards partially funding eShip. As it stands eShip has raised R1-million in investment.
So where does eShip’s value truly lie? Well according to the site it can drop costs for customers up to 50% because companies are now bidding for your business — in McLennan’s words, “it gives ordinary people the same negotiating power of large companies who ship large volumes regularly.”
Where its value might be felt most though is with the smaller independent transport companies who might not have the marketing budgets larger companies have at their disposal in the sector. To get the chance to be found on a public platform, and get exposure from the feedback of doing a good job could prove very fruitful for smaller contractors.
eShip also works internationally, as many transporters have international import/export permits, and the only limitation is that all prices are currently shown in South African Rands to international users. This is something McLennan wants to address in the near future.
McLennan feels that exposure could be a challenge for eShip, both on the transporter and user side. From February to March there will be an advertising push and until that point transporters can use the platform for free. Once the base of listings is large enough these “trial accounts” will be given a month’s notice to take out a paid membership to keep using the platform.
After South Africa’s market is secure McLennan hopes to target the African market, and then countries that are South Africa’s largest trade partners, as well as other developing countries — hopefully within the next two years.
eShip is a niche marketplace, filling the gap between post office and regular courier. There is no doubt value in the platform for consumers, and as more listings are posted there will be more value created for transport companies to join the platform. There might well be a few bumpy months at the start, but if transporters find that the amount of extra work from being on eShip justifies the cost, then eShip could well be the next big transport startup in South Africa. This is definitely one to keep an eye on.
Check out the eShip website here.
