Andy Higgins, MD of local e-commerce firm Bob Group, is bullish about the company’s new and growing smart locker offering for online delivery and distribution.
Having started its life as bidorbuy in 1999, Bob specialises in logistics for e-commerce, helping to streamline order fulfilment and shipping processes for merchants selling online. The company offers a number of tools such as shipping and tracking solutions, payment facilitation and a software-as-a-service solution for courier companies.
Higgins, who founded bidorbuy and was instrumental in starting PayFast in SA, told Business Day that lockers placed at shopping centres or other central community locations could help to push up online retail adoption in the country.
Bidorbuy was one of the first local online players. How have you seen the market evolve?
One of the big differences is the advent of marketplaces, the likes of Takealot, Amazon and Makro. They tend to offer a structured catalogue, whereas bidorbuy, which has now evolved into Bob Shop, is less structured. We don’t have big warehouses where we hold stock.
People shop online for three main reasons. Predominantly it’s about price and convenience, followed by choice and variety. I think that has stood the test of time.
What’s the rationale for the smart locker offering?
In SA, we are lagging behind when compared to other countries, but that’s great because we can learn what’s worked elsewhere.
We’re quite ambitious, we’ve brought our own solution and “South Africanised” it. One of the things we’ve done is manufacture [the lockers] locally, rather than importing as many others do. That enables us to do it a lot cheaper.
Our solution is also battery-based, so we’re not relying on the electricity grid. It’s much easier to place lockers in certain locations where you don’t have to worry about power cuts. They don’t need to be placed on a slab either.
What is the market opportunity?
Speaking to some experts, though SA does have its own nuances, they say we need about one locker for every 6,000 people in the country. With a 60-million population, we would be looking to place about 10,000 lockers nationwide.
That way we get the economies of scale and that’s what it’s all about. We’ll then be able to offer the service more cost effectively, but to get to that point will require quite a bit of an investment. We’re still very early in that journey, and are approaching 100 lockers around the country.
What do the costs look like for you?
To break it down: we’re able to produce a 19 compartment locker locally for about R30,000, including all the electronics, locks, steel, metal and paint. We will need to pay a partner a per-parcel revenue share, which starts at about R2. In some cases we’ll pay a fixed fee to them.
That gives us a kind of network, but we then need to get the parcels to move from A to B, and for that we need a whole logistics network.
The way we’re tackling that, to make it financially viable, is by making our network courier agnostic, rather than us just having the network and we control everything.
For example: one use case is to have these lockers at a residential estate. Rather than having many couriers having to put their own locker at each entrance, we can put our lockers there and have a number of different courier companies tap into that and make use of the asset.
Is there any benefit in where you place lockers?
Most of our lockers now sit inside shopping malls.
What we’re seeing is a little bit of a reverse effect, and more mall owners are realising this. Having our lockers can get foot traffic back into their shopping malls. Someone might order something online because of the price factor, but when they collect they may also buy something at the mall.
Outside of the lockers, how is the business performing?
We have people who buy second-hand and refurbished goods for example so there’s a lot of trade going on. It’s also around collectibles antiques. Even second-hand phones. There’s a lot of variety. I feel we are benefiting from increased groundswell that’s coming from the Chinese retailers, that people are getting more comfortable buying online.
Fortunately for us, we’re not directly in the crosshairs of the big international players that are exporting to SA.
We are seeing modest growth at the moment and would of course like to see more. Bigger growth, however, is happening in other sectors of our business including payments and logistics, and with the lockers.
With us providing the underlying infrastructure, as the
e-commerce market grows, we benefit, and we’re not solely dependent on our marketplace.
This article has been edited for clarity and brevity.
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