A new app, Last Mile for BoP (Base of the Pyramid), aims to improve the South African informal trading process by enabling spaza shop owners to connect to a database of wholesalers to easily review prices and place orders.
Developed by a Cape Town-based start-up also named Last Mile for BoP, the app collates pricing information from wholesalers to make it easy for spaza shop owners to compare prices and place orders using a data-light Web-based app.
Founder Arnaud Blanchet says it is a cost-effective distribution system that targets the base of the pyramid ? those people with less than $4 a day who live in townships and rural areas.
"Spaza shop owners can access it through their phones to easily review specials being offered by wholesalers. They can prepare shopping lists and also place orders which can be delivered directly to them," says Blanchet.
He notes this will also be a job-creating opportunity for private drivers who will be paid for the deliveries; an amount equivalent to what a shop owner would have to pay for travelling directly to the supermarket.
According to Blanchet, about 80% of spaza shops feel they require more skills to boost efficiency. "By providing an easy to use tool, they will be helped in becoming more efficient. This will mean they provide goods at cheaper prices. This solves another problem because spaza shops can be as much as 30% more expensive than more formal outlets."
Blanchet says the app enables owners to reduce costs, and allows customers to access social products and basic household goods more reliably, for less. "The entire system saves store owners both time and money, vastly improving their trading efficiency."
The company faced a few challenges with the app, including accessing wholesalers' pricing databases and increasing its scale. "Collecting the prices manually isn't efficient and wholesalers don't easily hand over their data."
It says it is also difficult and costly to develop a "scalable last-mile distribution channel for just a few products and services".
"Currently, our biggest problem is scale but we have received really good feedback from spaza shop owners," says Blanchet.
The app is only available in certain places in the Western Cape. The company hopes to expand it to the rest of the country by the end of this year. "Anyone can access it, but will not have an ability to place orders until shop details are recorded through an online registration process."
The start-up says it does not charge any fees for use of the app as it is a social business designed to assist spaza shop owners and the township/rural public. Revenue will only be generated through adverts running on the app.
It hopes that later it will expand to offer similar services to other informal traders like township or rural beauty and hair salons.
"We are really targeted in SA for the moment where we've realised a big need for initiatives working to build township businesses."
The app currently hosts 100 spaza shops that are trying it out.
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