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Logistics: the backbone of South Africa’s ecommerce boom
South African ecommerce is in a better place today than at any other time in its history. According to research released by PayPal earlier this week, online shopping in South Africa is expected to reach R37-billion this year and to jump to R46-billion in 2017.
While much of that growth has been fueled by increased spend digital goods, such as apps, ebooks, digital music, films and videos, we’re also buying a larger number of physical goods — including fashion and consumer electronics.
While a number of factors have driven growth across all these sectors, the rise in sales of physical goods could not have happened without the space taking an increasingly sophisticated approach to logistics.
Starting with Takealot’s acquisition of Mr Delivery in 2011, the space as a whole has taken a much more nuanced approach to logistics. Where it once relied on traditional courier companies, a number of innovative services have cropped up — allowing goods to be delivered faster, safer, and more consistently than ever before.
Looking at the numbers
If you were at the Ecommerce Africa Confex, held in Cape Town earlier this week, you might’ve got an inkling of this. The exhibition floor space was dominated by logistics companies, from traditional couriers such as RAM to Shepherd, an escrow startup aiming to take the risk out of online buying and selling.
But there are numbers to back up this increased efficiency in ecommerce logistics. Logistics and warehouse solutions company ParcelNinja reports that it saw around 450% growth in ecommerce delivery through 2015 and that it did more than 55 000 orders in December.
That’s massive when you consider a 2015 survey which showed that 58% of South Africans who have not shopped online say that concerns about not receiving items they have ordered is the reason they don’t do so.
Pargo meanwhile recorded a 372% increase in online retailers adding their click-and-collect service as a delivery option on their platforms.
Sure ParcelNinja and Pargo are just a couple of businesses, but the niches they fills play an important part in making ecommerce more freely available to South African entrepreneurs. Importantly they’re just one of many businesses that have found their way into the public consciousness.
Some of these companies, such as FastVan, are aiming to disrupt the entire industry. Positioning itself as an Uber for parcels, its app allows clients are able to create quotes and book courier, removal, and domestic delivery services. The nearest free courier will be notified for parcel collection. Once collected, the customers can track the package in real-time through the app’s built-in map.
The platform offers other Uber-like functionality, such as rating couriers, receiving invoices via email, and app notifications for collection and delivery.
Others, such as Pargo, have sought to eliminate people’s fears of their parcels not arriving (or arriving when they’re out) by setting up dedicated drop-off points at physical locations around the country.
While this kind of option is more convenient for some people, it also adds a layer of security to the informal ecommerce economy. Knowing that you’re able to pick up something you’ve bought on Gumtree or OLX in a safe, public area means you’re much more likely to make a purchase than if you had to drive to an area you’d never been to before.
Similarly, Shepherd’s escrow service helps alleviate customer fears that they could be scammed. You’re a lot more likely to spend money, after all, if you know that the person on the other end will only get it once you’ve received the actual goods.
Perhaps though the most exciting evolution of the ecommerce logistics space in the past year has been the rise of on-demand couriers. Startups such as Wumdrop, Rush, and PicUP have helped move ecommerce deliveries from something you wait a few days for, to something that takes an hour or two at the max.
That’s massive for verticals where the pressure is on to get goods delivered as fast as possible. One of the first ecommerce platforms to recongise that was SA Florist, which was able to launch its “Zoom Bloom” flower delivery service in 2015 after baking Wumdrop’s API into its site.
Interestingly, more traditional players seem to be picking up on this too. Check out this tweet from Wumdrop founder Simon Hartley:
I’ve had the odd cry while getting this thing off the ground.
But our API working so well with @zando_co_za makes the room SUPER dusty.
— Simon Hartley (@streakley) February 18, 2016
Suddenly, you can have a new pair of shoes, or a shirt, delivered to you at work within hours of ordering it. Waiting to get to the shops after work or on the weekend ceases to be the more viable option.
Of course, none of these services can be everything to every ecommerce supplier. On-demand services such as Wumdrop are great in large cities, but don’t really help if you’re trying to get a a parcel to a tiny town in the Karoo.
It’s obvious however that clever use of technology has enabled a new wave of logistics companies to become the backbone of South Africa’s growing ecommerce space.