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Collection and drop-off point courier service Pargo has shown significant growth over the past year. Ventureburn had a chance to catch up with the founders Lars Veul (pictured right) and Derk Hoekert (pictured left) about the company.
When Ventureburn spoke to the duo in February of this year, the company had 20 client stores in the Western Cape. Since then, Pargo has grown to around 500 pickup points around South Africa with access to an additional 1 500 points. They have partnered with the likes of Vees Video, Clicks, and Shell in order to grow their business. According to Veul, “There’s a pickup point in almost every small town.”
Consumers are charged a flat fee of R75 to send a parcel anywhere in South Africa for up to five kilograms.
Even though there is access to 1 500 pickup points, Veul and Hoekert are purposefully staggering their own growth in order not to flood the market. The reason behind this is to build up the current pick-up points to show them volume and expand from there. They see having multiple points in a single area as counter-productive to the business.
Pargo and its clients are finding more and more customers are switching from using the traditional post office to their service. This is not only due to the constant struggles the post office has been facing, but also the collection flexibility of most of the Pargo points. The duo said over 35% of consumers are collecting their parcels out of standard working hours. This number increased from 10% at the beginning of the year. The majority of consumers collect their parcels within one and a half days from drop-off at a collection point.
Another aspect of Pargo, which the duo say is essential to ecommerce, is product returns. The service makes returning products for consumers and companies much easier. The model was implemented in Europe primarily for the returns system, which Pargo has brought to South Africa.
One of the most interesting developments has to do with the company’s expansion. Pargo is starting to move into informal settlements in order to cater to their customers. Right now the company has partnered with 10 entrepreneurs in the Khayelitsha informal settlement.
In order to facilitate their current and potential customers, there is a dedicated team of technicians in the Netherlands who are not only working on the Pargo platform, but plugins for a variety of ecommerce platforms. Their aim is to make integration as seamless as possible for potential clients.
The duo said they’re also looking into migrating into Africa in 2016, which would start with cross-border countries first. According to Hoekert, Pargo would be able to reduce courier fees charged on sending parcels to other countries. As of right now it’s only a thought and hasn’t hit the planning stages.
Editor’s note (25 January 2018): Pargo co-founder Lars Veul subsequently told Ventureburn during a catch-up with the startup in January 2018, that it was incorrect to say at the time (in November 2015) that the startup had 1500 pickup points. Rather, he said, the company had grown to around 500 pickup points around South Africa with access to an additional plans to grow to 1500 points in the coming years.