Profit-making idea: Last-mile e-commerce distribution in South Africa
E-commerce distribution is changing and therein lies huge opportunity, says Gert Steyn, co-founder of digital food marketplace, Food Supply Network, which connects buyers, sellers and distributors in the food industry.
Currently, in South Africa, e-commerce distribution systems centre on large warehouses that service a radius of around 500km. Deliveries can take up to a week, whereas in China, an order is delivered within 30 minutes, give or take.
“Big companies have the advantage of large warehouses and a large supply of capital, but if you want to deliver a product within 30 minutes, you’re going to have to focus on a two-kilometre radius,” he explains. “This requires many small distributors scattered all over the place. It’s really exciting for me as it makes room for many small entrepreneurs to enter this space,” Steyn says.
In the next five years, e-commerce platforms may approach smaller, local service providers to deliver parcels by bicycle or scooter. “Technology will play a central role in orchestrating what goes to whom and will take care of payments; yet, the logistics and delivery of the product which, admittedly, is the trickiest part will be handled by smaller third-party distributors on behalf of e-commerce outlets. In China, for instance, they have smaller distribution centres all over the place,” he explains.