Last Mile for BoP

We envision a world where everyone, even low-income consumers, can shop locally all the goods and services they need to live a dignified life.

To reach this vision, we made our mission to improve the distribution in informal markets by leveraging technology and the existing assets of the informal economy, its rich networks of informal traders.

Our mobile application enables them to order all their stock at the best price and to get it delivered to their doorstep. It assists them to manage their inventory and improve their business skills.

Our deliveries are operated by local owner-drivers and we want to help local producers to access the market by listing them on our app.

We use informal grocery stores as a platform to build a more inclusive economy. 

In a recent survey done in townships around Cape Town, 89% of informal grocery store owners listed the lack of business skills and working capital as major constraints to run their businesses. 

As a result their stores (called spaza shops) are inefficient (1st problem): there are no business record, regular out-of-stock, limited product range, and prices can be high. Their low-income consumers are left with a poor and expansive shopping experience or have to pay high transport costs to shop at supermarkets outside the townships.

In addition, access to Internet is expansive and low-income consumers, as well as informal stores, can be excluded from the digital economy and as a result from the formal economy (2nd problem).

On the other hand, formal companies lack precise and updated data on informal markets which makes it difficult and costly to address these markets that remain largely underserved (3rd problem). 

We want to empower the 130.000 informal grocery store owners and indirectly the 77% of South African households who regularly shop at these shops.

60% of the shops are located in urban areas. They are open long hours, from 6am to 10pm, 7 days a week. 40% of the spending is done by low-income customers who fall under LSM 1-4.

54% of the informal shops are owned by foreigners and this proportion is rapidly growing. Somalians represent 80% of the foreign shop owners.

Their typical shop keeper is 94% male, 28 years old, has been in business for 3 years and spend on average $1000 on stock per week.

This population lives in previously disadvantaged areas (during the apartheid) and still experience poor service delivery (electricity, sanitation, etc.). They can have a poor telecommunication coverage, especially in rural areas, and the high cost of data and airtime weigh on their budget and represents a constraint to their inclusion in the digital economy.

The stores we target do not use any management system for the moment and at best only register their purchases using pen and paper.

During a first pilot project, we generated more than 100.000 USD, delivered around 200 van-loads in townships and validated our main assumptions. 

It enabled us to improve aspects of our business model that did not work and prepare a more scalable version of our solution.
Our app is now integrated with the leading wholesalers' management software in South Africa, the main cashless payment solutions used in informal markets, and with a successful outsourced logistics solution. We are technically ready to scale up.

The pilot project also enabled us to refine our development strategy.
We decided to first attract informal grocery stores. We use Facebook pages and groups as well as WhatsApp broadcast messages to build our community of users and to share with them useful content (prices, testimonials, tutos). We currently have 1400 stores and we attract 100 new stores every week.

Then we attract the wholesalers and brands by proving them that we can influence the informal traders buying behaviours (through exclusive deals).
This first step enables us to make informal stores more efficient (we saved them 5 to 10% on their stock).

In a second step, we will offer a better shopping experience to informal store customers (through better inventory management, loyalty programme, etc).

Finally, having access to data on the stores and on their customers, we will foster the distribution of social innovations (solar lights, clean cook-stoves) where they are most needed.

We want then to "white-label" our solution to expand in other African countries.

Since we aggregate the catalogues of all the main wholesalers, we offer the largest catalogue on the market. As we compare the prices of these different catalogues, we also offer the best price for every product. 

Our competitors have agreements with a few manufacturers and brands and cannot always compete with the prices of wholesalers.

Working with wholesalers also enables us to be asset light as we do not need to invest in warehouses and it reduces our logistic costs.

After more than 6 years working on projects in informal markets and at the base of the pyramid, we have a deep understanding, network and knowledge of our sector and the informal grocery stores that is key to succeed.

Our technological solution is built for scale as it can easily integrate with different wholesale management software, logistics and cashless payment solutions to be replicated in other markets.

Technology is at the core of our business. Our solution is an eCommerce solution adapted to informal markets. 

We have already developed our mobile application and we integrated it with other technology solutions serving our sector like a wholesaler management software, and cashless payment and logistics solutions.

Our technology has been adapted to answer the needs of our target: our app is mainly visual so it can be used by people that do not know how to read and it has been optimized to use as little data as possible; it only take 4MB to download it.

We are continuously improving our solution using the latest eCommerce technology solutions and we are now looking at developing the automation of our user orders thanks to data science to predict the demand.
We are part of the Alibaba eFounder Fellowship and we have mentors at Facebook and Jumo to assist our team to stay at the forefront of innovation in our sector.

We currently have 1400 stores in our user base. We give them access to the prices at wholesalers around them. During our first pilot project, we measured that we saved our users between 5 to 10% on the cost of their stock.

We plan to grow our user base to 12000 stores and save them over 90 million USD over the next five years, increasing their income by 20%. Each store has around 350 regular customers but we have not been able to measure yet the impact our solution these end consumers.

The metrics we use to measure our success are a mix of business and social impact metrics. Our top three goals for this year are: 

- Reach 5000 informal grocery stores and provide them with price transparency giving them access to the prices of wholesalers around them and offer a delivery service to 2000 of them
- Generate a saving of 5 to 10% on the cost of their stock and on the cost of their transportation for these stores
- Improve shopping experience of the store customers by reducing the out-of-store occurrences and the prices of products 

The lack of accessibility to communication network and cost of data are an external risk we face. Shop owners need to have a smartphone and access a communication network to access our app. Access to smartphones and communication networks is rapidly increasing in South Africa and Africa but can remain expansive. Our app is extremely data light and we want to develop partnerships with mobile operators to improve the connectivity of shops by offering them a data-free app (reverse billing) and developing WiFi hotspots in the stores.

We need to serve at least 5000 stores to offer relevant data to brands and become financially sustainable. This represents a big challenge for a bootstrapped social business. Our strategy to improve price transparency using Facebook and WhatsApp channels before investing too much on delivery enables us to mitigate this financial risk.

Establishing strong partnerships with the wholesale ecosystem is key for us as our asset light and "best price on the largest catalogue" Unique Selling Point is dependent from our ability to work with all the main wholesalers. This represents a risk as we are dependent on the willingness for wholesalers to participate to our platform. We are developing strong added value for wholesalers (loyalty programmes, data reports, etc.) to mitigate this risk; we have already secured partnership with important wholesalers and we are in discussion with the largest group of wholesalers in Southern Africa.

Shopit is a registered trademark of Last Mile for BoP, a profit for purpose business founded by Arnaud Blanchet in 2013 in Cape Town, South Africa. Prior to starting this company, Arnaud was a CFO at the Women's Forum, a startup based in Paris and Shanghai.

In 2016, a common contact introduced him to Nicolaas van der Westhuizen, a senior software developer specialized in eCommerce who had been working on other tech projects at the base of the pyramid. Nicolaas joined the team as CTO. 

Both Arnaud and Nicolaas still lead the organization today.

Shopit is based in Cape Town, South Africa and operates in the different townships around the city. It has recently launched its activities in Johannesburg, Pretoria and Durban targeting the same type of informal stores in townships.

Cape Town represents an interesting base for Shopit as it is a growing technology hub in Africa attracting successful technology businesses like Amazon Web Services, WiGroup and various software development boutique firms. It is therefore attracting top tech talents needed for our activity.

Cape Town is also a centre for social innovation at the base of the pyramid with organizations like the Bertha Centre or successful start-ups like Jumo and Zoona. Moreover, it is surrounded by various townships making it a perfect place to experiment our solution and gather knowledge on informal markets.

Finally, Cape Town and South Africa is an ideal base to later develop our activity in other African countries.

In addition, our dedicated management team has an extensive business experience, a strong local knowledge and network, a clear vision and a resolute determination. We put together a team who is passionate about the problems we want to solve and who is extremely resourceful. We managed to develop a solution that is suited for our market and easily scalable and we have already successfully tested in the market during a first pilot project.

Over the last years, here are the main rewards and recognition our project and team has received and how it benefited our activity:
- Arnaud Blanchet selected for Africa-France Young Leader; it grew his network in West Africa and identify our next markets to expand.
- Shopit selected for the Alibaba and UNCTAD eFounder Fellowship 2018; eCommerce and Data Sciences skills to improve our activity.
- Shopit selected for the MAN & Yunus Social Business Impact Accelerator 2019; logistics skills and introduction to a network of investors.
- Shopit selectedAshoka Social Investment Accelerator 2019; introduction to a network of investors.

We are a profit-for-purpose business and we plan to reach financial sustainability within 3 years. 

Our solution is free to use for informal grocery stores: they can download the app and compare prices for free; they can place orders without paying any commission, paying the same price as at the wholesaler. They only pay part of the delivery fee.

We charge a subscription fee to wholesalers to display their catalogue on our app and we take a commission on the products bought from our app. We use these revenue streams to subsidize our delivery service.

Our main income streams come from FMCG brands. We charge them to highlight their products on our app (banners, popup, notifications, etc.) but most importantly, we charge them to access the data we collect through our app. We offer them some informal market reports and some assistance to optimize their marketing operations in informal markets.

As an early-stage social business, being selected for this challenge would enable us to: 

- Get our vision and business model challenged by brilliant minds to help us refine and improve our activity;
- Gain in credibility that is key to convince investors and key stakeholders;

We are also looking forward through this challenge to being able to network with like-minded entrepreneurs and contribute to their projects and to building a more inclusive economy.

With Solve's support, we are looking at three main projects to accelerate our development and social impact:
- Improving our mobile application by developing loyalty programmes and a Point of Sales and inventory management for stores (software development over 2 years)
- Reinforcing our team to develop our data science, marketing and sales capabilities (one data scientist, one sales & marketing manager and 5 sales representatives over the next two years);
- Funding a pilot project to test our new logistic capabilities (subsidize part of our deliveries to 200 stores for 6 months).