Entrepreneurs expect the growth of the e-commerce sector in South Africa to come from the townships, requiring an urgent response to logistical challenges in those areas.
Property developer Examplar, specialising in rural and township real estate, held its third annual township retail investment summit in Alexandra on Wednesday in collaboration with Nedbank.
Godiragetse Mogajane, founder of Delivery ka Speed, said there was a growing market for e-commerce in the townships, but it had been hindered by poor infrastructure and lack of access to courier services.
"As more people in the townships have access to the internet and are aware of e-commerce, there is growing demand to purchase products online — and not just food — but there is still a hurdle of getting deliveries to townships in a short space of time, and at a low cost."
The e-commerce sector makes up 6% of total sales in the country, with the number of online shoppers projected to increase by more than 6-million by the end of the year.
"This increase is likely to come from the townships, which is important because this is where a lot of people live," said Mogajane.
Townships are home to more than 11-million people, constituting almost a quarter of the population.
According to the Township Customer Experience report, there was a jump in the number of people making online purchases in townships in 2021-22. In 2021, the report found that only 28% of its respondents had made online purchases, while the number increased to 70% in 2022.
After the Covid pandemic, there has been an increase in the establishment of online delivery services such as Delivery ka Speed, eKasi Deliveries and KasiD, which operate where big brands such as Uber Eats and Mr Delivery withdrew their services.
Mogajane said some of the challenges faced by these operators included inaccurate addresses that make it difficult for deliveries to arrive on time. He added that this contributes to high delivery costs.
However, growth in e-commerce presented an opportunity for local delivery companies to grow past last-mile deliveries and operate as courier services for townships, he said.
"Delivery Ka Speed has been in discussions with brands such as Shein and Temu about the possibility of working as their delivery partner in the townships. This is going to be great for us and it will also create some competition with the retailers."
Looking at the penetration of the township market by international brands such as Temu and Shein, Nomfezeko Mthembu, e-commerce fulfillment manager at Spar, said while
there had been a growth in food and grocery delivery services in townships, there was an opportunity to explore clothing sales. "There’s a big market in the townships for brands such as Shein and Temu, and other local brands. Clothing brands have been slow in adapting to online sales, particularly in townships," she said.
Mthembu added that while there was an opportunity for growth, traditional logistics companies were likely to continue avoiding townships.
Mogajane concurred, saying local last-mile delivery services had
managed to succeed in the townships as they hired local people, drastically reducing the criminal element that threatens some businesses in those areas.
Meanwhile, Maude Modise from the Shoprite Group said the company was finding ways to assist local businesses in townships to integrate e-commerce and artificial intelligence in their operations, for easy product procurement from Shoprite.
Shoprite announced it would acquire the Cambridge Food business and Rhino Cash and Carry from Massmart in 2021, with the Competition Commission approving the sale in 2022. This year, the company launched its Cash and Carry app,
designed for informal businesses in the townships.
"We have launched a B2B e-commerce tool where small businesses can buy goods online, get free deliveries within a 50km radius and get discounted prices as well. This helps
increase efficiency. This initiative is designed to position Shoprite as the spaza store owner’s friend," she said.
Modise added that the retailer had found that small and informal businesses were keen to use the online service. She said the group was assisting small businesses create an ecosystem in which they could supply each other with the necessary products to help boost revenue across the country.
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