Pargo aces last-mile deliveries amid township boom

South Africa’s e-commerce boom is no longer just reserved for leafy suburbs. New research shows that in the space of just a year, online purchases in townships grew by a staggering 42%. It went from 28% in 2021 to 70% this year.

According to the 2022 South African Township CX Report, the township e-commerce boom is being driven by millennials and Gen Z – a generation that is also helping to drive the consumer credit sector forward.

“Gen Z’s represent a group with a lot of buying power. As the first generation with no memory of a pre-internet world, they are far more connected through technology to goods and services than the generations before them,” explains SweepSouth chief executive Aisha Pandor.

Given their well-documented love of technology and the internet, it is therefore no surprise that millennials and Gen Z are clicking more to shop online. The South African Township CX Report notes, “The younger the audience, the higher the propensity is for online purchases.”

Township shoppers in South Africa seem to favour fashion, mobile data, and food. But as much as e-commerce is on the rise in townships, it is also important to understand it is not all plain sailing, warns Lars Veul, the chief executive and co-founder of Pargo.

Pargo is making waves as a smart logistics start-up that simplifies online delivery through its tech-enabled network of access points. The Cape Town-based tech company solves the many challenges of last-mile logistics through its platform and fulfilment solutions anchored by a vast, nationwide network of thousands of Pargo Pickup Points.

Retailers looking to break into township markets will find that cash is still king, and there remains a lot of skepticism around online transactions, believes Veul. Many residents still don’t have smartphones that support mobile payments, and deliveries to consumers present another challenge.

“Often courier companies are reluctant to enter areas identified as crime hotspots, and even if they do, there can be the problem of inefficiencies in geo-location apps that might not pick up specific addresses. Effective delivery can’t be emphasised enough,” says Veul.

Meanwhile, another recent study, “Online shopping behavior and service quality perceptions of young people in South Africa: A Covid-19 perspective”, says young shoppers consider delivery costs, time waiting for a delivery and order accuracy as the most important factors in selecting an online store

Veul suggests a number of ways for township challenges to be overcome thanks to huge advancements in technology.

• Click and collect: There’s no need to wait for couriers or deal with the uncertainty of when a delivery will take place, believes Veul. You can simply collect from a pickup point when you’re ready.
• Build trust: It’s important to remember that residents may have saved up precious Rands for months to make a purchase online. That should be respected, and they should always be reassured their parcels are on the way. This can be done through real-time driver tracking and automating delivery status changes.
• Research the area: If there are crime hotspots, know where they are. This also applies to areas which most people consider safe. The old adage of “location, location, location” is just as important in the townships as it is elsewhere.
• Free delivery: This is a massive drawcard, especially in townships where money is tight. It’s a no-brainer that if your delivery is free and your competitor’s is not, the customer will choose you.
• Social’s where it’s at: Selling on social media platforms like Facebook and Instagram is big business. It’s cheap and anyone can do it, and with almost everyone now on social media, it represents the perfect chance to reach out to township residents, according to Veul.

He believes SellOnSocial by TymeBank, a customised end-to-end e-commerce tool that allows small businesses to manage the sales journey from order to delivery across multiple social media platforms, is definitely worth looking into.

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