South African click-and-collect company Pargo is exploring an expansion into the rest of Africa, its CEO said in an interview, betting on e-commerce growth on the continent.
Africa is forecast to surpass half a billion e-commerce users by 2025, having shown a steady 17% compound annual growth rate of online consumers in the market, according to the International Trade Administration, a U.S. government agency.
This growth is driven by increasing internet penetration, smartphone adoption and the growing use of digital financial services, especially mobile money.
“We’re looking at an expansion strategy to move into multiple markets. We are operational with a pilot in Egypt as a second country, but we are quite seriously looking at, in the future, building a network across Africa,” Pargo CEO and co-founder Lars Veul told Reuters.
The firm has more than 4,000 pick-up points located at retail stores across South Africa, including informal township “spaza” corner shops.
Veul said the options would span the main economies in Africa.
“We don’t know exactly yet. So, it’s more about the countries where e-commerce is booming or expected to boom.”
The expansion will also be driven by following its existing clients into countries where they operate outside of South Africa, Veul added.
In Egypt, Pargo has been testing the market since last year with 150 pickup points, also trying to see whether the company can make it work operationally, Veul said.
“Additionally, we have had to create a payment solution as 80% of payments in the Egyptian market happen with cash.”
Veul, a Dutch citizen who moved to Cape Town in 2012 from Amsterdam to help set up online marketplace Groupon in South Africa, said he co-founded the company in 2015 after realising last-mile delivery was a serious challenge for e-commerce businesses on the continent.
Pargo has partnered with major listed telecoms, banks and retailers including U.S. e-commerce giant Amazon (AMZN.O), opens new tab, which launched in South Africa in May this year. Amazon’s customers collect their goods at Pargo’s pick-up points.
Click-and-collect allows shoppers to avoid delivery costs and the agony of waiting for the delivery, while also lowering last-mile delivery costs for companies.