This year, global ecommerce sales are expected to hit more than $6-trillion. With the continued growth in online shopping and greater choice than ever before, consumers are becoming less tolerant of cumbersome shopping experiences and overly long delivery windows. 

Expectations of the online shopping experience are evolving as customers expect convenience at all levels – from product to mobile search, seamless checkout and hassle-free delivery. 

In South Africa, revenue in the ecommerce market is projected to exceed R117-billion in 2023, Statista data shows, and grow annually by 11.9% by 2027. 

Almost half the population (49%) has bought something online, which is expected to hit 59.7% by 2027, by which time the average revenue per user is forecast to hit R3,940. 

For retailers and their logistics companies, this presents a lucrative revenue stream, but getting parcels into the hands of their customers remains a headache as one of the biggest problems is inaccurate or access-restricted addresses, including township and rural areas, security estates and business parks, high-rise buildings and outlying areas. 

Pick it up 

It’s the reason why more people are opting to collect in person or pick up in-store. 

Click-and-collect and returns solution for online and omnichannel businesses, Pargo’s Pickup Points, and Click & Collect services allow low-to-middle-income consumers the option of buying online and having their goods delivered to a central point close to their homes. Returns are smoothed through the same process.

It’s making online shopping more accessible and even affordable to a broader range of consumers, who instead of relying on deliveries can collect their goods from major retailers such as Clicks, Woolworths, Cape Union Mart and TFG, as well as independent “mom and pop” stores from a pick-up point.

Pargo’s Lars Veul says these retailers have been able to boost their offering and increase brand equity through click and collect, while customers collect their orders at a time and location that suits them, making the overall shopping experience more convenient and enjoyable. “This has led to increased customer satisfaction and repeat business for retailers.”

Veul and his Pargo cofounder Derek Hoekert were posted to South Africa by Groupon a decade ago, in the early stages of ecommerce, and quickly realised that the biggest problem with online retail in the developing world was getting the parcels into the hands of the customer. That planted the seeds for a business idea: two years later, they quit their jobs and started Pargo.

“We realised up to 30% of orders were just not being delivered and about 50% of orders were not being delivered on the first attempt, because of addresses, because people were living in areas that are not easy to access, or because they weren’t at home. So we came up with a very simple solution which is to set up a network of collection points at existing stores.”

Pargo’s technology allows for real-time tracking and monitoring of orders, providing retailers with control over the delivery process.

“It’s a simple solution, but has been highly successful and really helped us to solve the non-delivery issue for many ecommerce companies.”

Pargo has grown to just under 4,000 pickup points nationwide and is now exploring other markets outside SA, including Egypt, which has seen phenomenal growth in ecommerce, he says.

The company charges a flat rate for deliveries and returns anywhere and boasts a 100% delivery rate on the first attempt.

The business was a finalist at the 2018 FNB Business Innovation Awards and the cofounders won the Founder of The Year award at the Global Startup Awards in 2019.

Originally launched as a click-and-collect solution for parcels no bigger than a shoebox, it has grown into a tech-driven logistics service. One of its

innovations include Pargo plugins enabling retailers using WooCommerce or Shopify to load a WordPress plug-in that adds Pargo as a delivery option at checkout.

Over the years, Pargo has expanded operations to serve businesses beyond retailers. Veul says they are “very big in the education space”, where they fulfil hundreds of thousands of orders for students in rural areas. “They live in areas where normal delivery is not that easy, so they cannot receive their books or their assignments. We do. We work with the telecommunication companies, banks, even pharmaceutical businesses to distribute medication.

“In smaller towns and townships, we are often the only alternative. This has been really a big catalyst for our growth.”

Township test

The growth of ecommerce in townships has been astounding. 

Last year’s Rogerwilco Township Customer Experience (CX) Report noted that 28% of respondents had purchased something online. While ecommerce was tracking behind the national average at that point, the researchers identified several factors that were contributing to the slightly slower uptake, from banks using obscure payment terminology, a lack of trust in delivery and returns policies, and the danger of delivery vehicles being robbed of stock.

Within a year, online purchases in the township grew by 42% from 28% to 70%. The 2022 South African Township CX Report, based on a survey of more than 1,400 township residents, attributes this growth largely to the rollout of fibre and township entrepreneurs smoothing over delivery issues.

Takealot is a favourite retailer in townships, with 23% of respondents having used the service in the past six months, which is slightly above the national average (22%). But while Takealot township deliveries were deemed to be consistently successful, what is driving ecommerce in the townships is food delivery.

Deliveries were highlighted as a challenge, as courier companies were often reluctant to enter areas identified as crime hotspots, and even when they do, geolocation apps were not always efficient at picking up specific addresses.

A study published in August 2022, “Online shopping behaviour and service quality perceptions of young people in South Africa: A Covid-19

perspective”, said young shoppers considered delivery costs, time waiting for a delivery and order accuracy as the most important factors in selecting an online store. DM