Appy deliveries boost online sales
New Uber-style couriers complement e-commerce and threaten to disrupt the local logistics market
HIGHER internet penetration rates and a willingness by customers to buy goods online is stimulating the birth of new services such as Picup, an on-demand collection and delivery company, which launched in Cape Town this week.
Like the taxi-hailing application Uber, Picup is accessed via a smartphone app. In this case it is found on the WeChat platform through which customers can request a pick-up and delivery and also track the progress of the parcel to its destination. WeChat is a social communication platform owned by Tencent, a giant Chinese internet company, in which local media group Naspers holds a 34% stake.
The transaction is paid for either by credit card or through the online Picup wallet in which funds have been pre-loaded. Customers are invoiced by e-mail.
Picup founders Grant Isaacs and Antonio Bruni this week said their service, which offers delivery of parcels, packages and documents to destinations between 5km and 60km away, would disrupt the local logistics market.
The average cost of delivery de- pends on the mode of transport. Picup charges by the kilometre — approximately R8 per kilometre for a bicycle delivery, R10 for a scooter and R12 by car.
Isaacs said “if the delivery is within the CBD and the mode of transport is a bicycle then the cost is anywhere between R50 to R60. If the customer chooses a scooter then the cost is approximately R100 for 1215kms. If the delivery is made by car then the cost is R160 for 10-12kms and the package will be delivered within the hour.”
These costs decrease as the number of kilometres increases, he said.
Picup is setting up in a market where a similar service, Wumdrop, launched eight months ago in Cape Town. Wumdrop has since expanded to Johannesburg and its founders, Simon Hartley and Roy Borole, are planning a launch in Durban.
Wumdrop’s co-founder Hartley welcomed the competition. “By being first in the market we’ve always known that competition would arrive sooner or later — it was just a matter of when. Our attitude has and always will be to focus on rolling out our products.”
He said customers have been willing to pay “good money for our service from the get-go, because we solve a real problem”. Wumdrop is available via cellphone apps, the company website and via the websites of online retailers.
Hartley said, “There’s huge demand, if you’re looking at the right market”, but he added that the consumer market was also painfully small.
Globally, the on-demand budget courier service model is gaining traction with Postmates in Germany, Doordash in the US and Peppertap, a grocery delivery service, in India.
Picup’s Isaacs says although e-commerce is now established in South Africa it has not gained traction yet. “We believe this has to do with the lack of a reliable, affordable on-demand delivery service. When consumers shop, they want instant gratification and don’t want to wait three days for a pair of shoes or golf clubs.”
Picup has signed up more than 160 people — from students to pensioners and small fleet owners — who have been screened for security purposes and trained. The drivers and riders earn 70% of the charge.
Like the Uber model, they are not employed by Picup and can choose when to work. But a large percentage of the drivers work full-time and Picup is assisting these drivers with the loan of a phone to communicate with customers and Picup.
It is in talks with a telecoms supplier to offer free or discounted data to the drivers and riders.
All goods are insured to a maximum value of R1 000, which is included in the delivery fee.
Isaacs said Picup intended to partner with existing courier firms to assist them with emergency deliveries.
In March, consulting firm PwC said that in a survey in South Africa, 73% of 1 000 people interviewed indicated they have browsed goods online, but prefer to buy in-store.
According to research company WorldWideWorx, 16.2 million South Africans used the internet last year and this is expected to grow to 18.5 million users by the end of this year.
Wumdrop is in the final stages of locking down partnerships such as securing access to 180 professional drivers in Cape Town, Johannesburg and Durban. “Our priority thereafter is to expand to Durban, and consolidate our operations in Johannesburg and Pretoria.”