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“Smart Logistics Make South African Ecommerce Accessible To All”

Published 5 months ago
By BrandVoice Partner

Ordering online should be as simple as clicking through a checkout page of an ecommerce site, but as we know, waiting on delivery can flip the convenience of online shopping into a logistical nightmare.

Even if a courier informs you that delivery will take place on a specific day, figuring out when it will actually take place generally feels impossible. So, you hit pause on your day, wait on delivery and just when you think it’s ok to slip out for an errand, you get the ill-timed delivery text — your courier is outside. And that’s just if you live in the city.

For those living in townships, smaller towns, villages and rural areas, online shopping comes with even more potential frustrations. Informal housing, inconclusive addresses and poor infrastructure characterise these environments and excludes a large portion of the population from affordable access to the wealth of goods available online.

Such an unpredictable delivery landscape has made it challenging for businesses to deliver the convenience ecommerce is premised on. But as with all things where there is need, innovation is not far off.

It is precisely this challenge that entrepreneurs, Lars Veul and Derk Hoekert, set out to solve by starting the logistics company Pargo in 2015.

“Both Lars and I have a background in the ecommerce space. We initially moved to South Africa to assist with the expansion of Groupon in 2012. Back then, most ecommerce companies were deterred from using the national Post Office due to poor digital integrations, frequent strikes and service shutdowns; just as unreliable were the independent courier services, which couldn’t afford to make door-to-door deliveries to remote, nevermind unmarked addresses. We soon realised that the problems for ecommerce posed by the country were about as great as its promises and thus Pargo was born.”, says Derk Hoekert, co-founder of Pargo.

Pargo is a smart logistics technology platform that offers businesses a choice of data-led delivery services all aimed at making the delivery process more accessible, affordable and convenient. The core of Pargo’s business is a network of over 3,000 branded pickup points that are located strategically across the country.

This network offers businesses a distribution infrastructure covering over 87% of South Africa’s postal codes, which they can leverage to reach any customer easily, no matter where they live. The pickup points function as Click and Collect delivery hubs that online shoppers can visit to collect their orders.

Though the concept of Click and Collect as an alternative delivery method quickly entered the broader lexicon, selling it to the public in 2015 proved just as challenging as the problem Pargo initially sought to solve. Lars explains,

“The problem with starting Pargo was twofold. First, we needed to find stores that would agree to become Pargo Pickup Points and second, we needed retailers to buy into our click and collect model to send customers to the stores. We tried everything from pitching to all the large retail groups in the country to literally driving around towns on our bikes and ‘cold walking’ into stores at random, but we just got no after no after no.”

“Our big break finally came when the Media 24 company, Leisurebooks, started looking for an alternative to SAPO, and Freshstop at Caltex and Vee’s Video agreed to partner with us as our first pickup points.”

“The first twelve months soared! We accomplished a 49% month-on-month order growth, and our network of pickup points rocketed to 500 across South Africa in a matter of months. It was a hectic time on the road. I recall pitching in Soweto one day, flying out to Durban the next day for a client meeting and then driving around small towns in the Western Cape like Clanwilliam, Robertson and Villiersdorp over the weekend looking for potential local pickup point partners. Though it was a crazy time, it gave me invaluable insight into many of the infrastructural challenges South Africans face daily.”

Though the early months set Pargo on a blazing trail, disrupting the logistics industry in South Africa in their way, the company also succumbed to many of the hardships startups face.

“In 2016, we were dealt a devastating blow when Leisurebooks, which was our largest client and currently generating around 90% of our revenue, liquidated.”

Derk recalls,

“We scrambled the following months getting Pargo back on track, and for a while, it looked really bad. But luckily, during the 2nd half of 2016, companies started buying into our model. We signed big client, like Spree, OneDayOnly and Clicks who is still an important pickup point partner till today. Thanks to these partnerships, we raised our first round of capital in 2017 — we’ve had high growth since.“

In 2021, Pargo reported that their Click and Collect orders grew by 153% over the prior year, indicating that there is a growing need for alternative methods of delivery in South Africa. This trend is confirmed by many South African businesses, including The Foschini Group, Mr Price and Takealot, who have also started offering Click and Collect as a delivery method.

“We’ve noticed that the main reason why our Click and Collect model is so popular is that it addresses the unique challenge of access in South Africa head-on. Many South Africans are precluded from the ease at which goods can be bought online because they, for instance, live in informal housing, don’t have recognisable addresses or call far outlying areas home. For them, it can be much easier and less expensive to simply visit their local store to collect their online shopping.”

2020 catapulted many businesses into the digital sphere for the first time, and with COVID-19 and its accompanying national lockdowns still influencing consumer behaviour, this trend is likely to continue.

As a result, more people are buying online and with it comes a new set of expectations. According to a study published by Accenture, 60% of consumers choose a retailer based on the availability of their delivery options. Businesses need to take these expectations into consideration when going digital and account for the unique logistics landscape of South Africa if they want to be successful in ecommerce.

On Pargo’s plans for the future, Lars elaborates

“This year, we are expanding our network of pickup points even further, especially in townships, and planning the launch of several new products all aimed at giving businesses greater flexibility in their last-mile logistics strategy. These products will ensure that businesses can offer all their customers the full extent of the convenience online shopping promises.”

“Ultimately, we envision a time when there will be a Pargo Pickup Point around the corner of every African to realise our mission of creating access for anybody in Africa.”

Interested in using Pargo Pickup Points for your business? Get in touch with Pargo.

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