Africa’s booming e-commerce industry holds tremendous economic potential. However, a significant hurdle stands in its way: the Logistics gap. As online shopping gains traction, the existing infrastructure struggles to meet the increasing demand for efficient last-mile Delivery.

The challenges facing African e-commerce logistics are complex. Fragmented delivery systems, lack of digitized processes, and outdated practices among small merchants seeking cost savings contribute to the problem. Addressing these obstacles is crucial for unlocking Africa’s e-commerce market’s full potential.

Industry leaders are pioneering innovative approaches to bridge the logistics gap. By leveraging advanced technology, fostering collaboration, and streamlining operations, they aim to revolutionize last-mile delivery in Africa.

Shiprazor, one such company, provides a comprehensive platform that unites a network of digitized delivery partners. Merchants can optimize their logistics operations by eliminating manual coordination and delivering a seamless customer experience. 

Bridging the logistics gap goes beyond enhancing the Ecommerce landscape. It has the potential to fuel economic development, empower small-scale entrepreneurs, and create employment opportunities across the continent.

By nurturing a robust logistics infrastructure, Africa can harness the full potential of its rapidly expanding middle class and propel the ecommerce industry to new heights

In an exclusive interview with WeeTracker, Sahil Affriya, an ex-VC who is now the Founder and CEO of Kenya’s Shiprazor, provides insights into the shortcomings of logistics in the wake of African e-commerce and what is doable to plug in the gaps. 

You were once a tech investor. Why did you leave the VC industry to found a tech startup? 

Sahil: I believe my career choices are influenced by a combination of factors. Firstly, my entrepreneurial personality and experience working with startups have shaped my approach. 

Throughout my life, I’ve always gravitated towards working with startups rather than big corporations. In India, I started my journey with a tech startup, followed by a healthcare tech startup, and then a marketplace startup that I eventually sold. My background and experience reflect my strong inclination toward the startup ecosystem.

Secondly, I’ve identified a gap in the market, and I feel a sense of responsibility to do something about it. With my 2-year experience in venture capital and 12 years in the startup industry, I have the necessary means to make a meaningful impact. I have reviewed numerous pitch decks and have a clear understanding of the market and its potential.

Moreover, I have a network in Africa, which I have actively built and nurtured. This network has given me valuable insights and connections within the African market, further fueling my motivation to contribute to its growth.

Taking all these factors into account, I have decided to focus on being an intrapreneur to build my [own] startup. This path allows me to combine my entrepreneurial drive with the resources and support of an established organization. From there, I am open to exploring where the future takes me and adapting my career trajectory accordingly.

What inspired you to start Shiprazor, and how did you identify the need for a logistics aggregator and comparison platform in the Kenyan (and African) market?

Sahil: To be completely honest, my journey in the startup world has been influenced by a series of mistakes and a culmination of events. Having been a part of the Indian startup ecosystem during its early stages around 2013-2014, I now see striking similarities between the Indian and African startup ecosystems. 

I came to the continent via a road trip to South Africa. Since settling down, it almost feels like déjà vu. Notably, my previous experience in the logistics sector has given me a keen eye for developments in that industry.

Last year, while I was in India, I observed other successful logistics startups operating in the e-commerce space. I then traveled to Nairobi and noticed similar trends and growth in the African market. It became evident to me that whenever e-commerce experiences a surge, logistics needs to catch up rapidly, particularly in the last-mile delivery aspect. 

The speed at which e-commerce operates surpasses the capabilities of logistics infrastructure. Recognizing this gap presented a clear opportunity for me. I possess knowledge in building technology for logistics, and I have valuable connections in the venture capital space to support my endeavors.

Considering all these factors, I realized that I didn’t want to create something in a country where I lacked a deep understanding of the nuances. Therefore, I made a conscious decision not to delve into operations. Instead, I opted to create an aggregator. 

Shiprazor serves as a hub that brings together various delivery companies’ existing infrastructures. We don’t handle deliveries ourselves, but we provide e-commerce merchants with a platform where they can select their preferred delivery partner from a wide range of options. Whether they choose DHL, AeraMax, PDF, Little, or Bolt, our platform showcases the available delivery partners and facilitates the selection process.

In essence, my focus lies in building an aggregator platform that connects the dots between e-commerce merchants and delivery companies, leveraging existing infrastructure to streamline the logistics process. 

It would appear the Indian and African tech ecosystems are alike. Can you identify the similarities between the two?

Sahil: every business is solving some type of problem and it is important to understand the source of the challenge before they do so. The source comes down to people, which in turn, has to do with the type of society. 

There are several similarities between Indian and African societies but the most conspicuous is their sense of community and collectivism. Markets in the Western world are quite different, which is why copying business models and transplanting solutions hardly ever works.

The type of problem is linked with the type of society. If the problems are similar, the type of solutions would as well be similar. The kinds of businesses I have seen in India, I have noticed them in the continent. 

The ecosystem play is also going in the same direction. Both jurisdictions, at the crux, need support from the government, stakeholder support, and substantial local money to thrive and grow. 

Can you share some examples of the types of retailers that have benefited from using Shiprazor, and what specific pain points the platform has helped to solve for them?

Sahil: Currently, I’m unable to disclose specific names due to ongoing discussions. However, I can provide an overview of the types of customers we are working with or planning to work with in Kenya. Our platform is designed to cater to a diverse range of customers and their delivery needs.

We serve brick-and-mortar retailers and larger businesses that require a streamlined delivery process. With just a few clicks, they can arrange for the delivery of their products. Additionally, we support e-commerce businesses using platforms such as Shopify, WooCommerce, and Magento. These online merchants can seamlessly integrate our services into their existing systems.

Furthermore, we extend our services to small merchants who utilize popular social media platforms like WhatsApp, Facebook, and Instagram to sell their products. Our platform is equipped to handle the delivery requirements of these merchants, enabling them to focus on their sales while we take care of the delivery logistics.

To meet the diverse needs of our customers, we offer different delivery categories. Currently, our main focus is on hyperlocal and domestic deliveries, ensuring efficient door-to-door delivery within Kenya. While we haven’t yet ventured into international deliveries, we have plans to expand in that area by the end of the year.

In addition to our delivery services, we also provide warehousing as a service. This feature is particularly beneficial for small merchants who may not have the resources to store their goods. They can rely on us to handle their warehousing needs, allowing them to stock their products with us and manage deliveries seamlessly through our platform.

By offering comprehensive services and consolidating everything onto a single platform, we aim to simplify the delivery process for various types of customers, making it convenient and efficient for them to focus on selling their products.

What role do logistics and delivery services play in the overall success of an eCommerce business, and how can retailers optimize this aspect of their operations?

Sahil: I completely understand the importance of this question as it directly relates to the solution we are offering. When the e-commerce industry experiences growth, logistics inevitably becomes a significant barrier. Two key problems arise in this context.

Firstly, pricing becomes a major concern, particularly with hyperlocal deliveries. In some cases, transportation costs can equal or even exceed the cost of the goods being transported, sometimes reaching 40-50% of the product value. 

By consolidating and aggregating last-mile deliveries, we aim to significantly reduce delivery costs. This reduction is a substantial benefit for small and medium-sized merchants, as well as those who sell products in bulk.

The second problem revolves around the capacity and focus of these merchants. Small to medium-sized e-commerce merchants should not be burdened with solving logistics issues. Their primary focus should be on selling more and expanding their businesses.

Instead of spending hours managing deliveries, manual orders, and logistics-related tasks, their valuable time and effort should be directed toward sales and business growth. By partnering, they can prioritize their selling efforts while we take care of the delivery aspect. 

This level of partnership between e-commerce and logistics is mutually beneficial, allowing merchants to concentrate on selling, ultimately leading to increased sales and business success.

What are some of the biggest opportunities for eCommerce businesses in the African market, and how can these opportunities be leveraged to drive growth and success?

Sahil: The biggest opportunity in the USD 8 B industry lies with small players rather than the big players. In Kenya, for instance, there is a vibrant hustle culture, and we can see a proliferation of small businesses. 

These businesses, many of which may not even have an online presence, are not accounted for in existing e-commerce databases. They operate through social commerce platforms like Facebook, Instagram, and WhatsApp, and their sales volume may be as low as 30 or 40 deliveries per month, with perhaps just one product sold per day.

These small businesses represent a significant opportunity for us. While they continue to excel in selling through social media channels, we offer them a platform where they can expand their reach by creating websites using platforms like Shopify. By centralizing their delivery needs through our platform, we provide a one-stop solution that empowers these small merchants.

The key advantage for them is that they don’t even need to hold inventory. They can stock their products either in their homes or in our warehouse. With their focus solely on selling through Facebook and other channels, they can be located anywhere in the world. 

I have observed that many of these small businesses are female entrepreneurs or individuals running side gigs, which highlights the significant potential for women’s empowerment and the boom in female entrepreneurship.

While larger players may handle hundreds or thousands of deliveries per month, it is the aggregation and centralization of delivery services for these small merchants that will make a substantial impact in the market.

How do you balance the need for cost efficiency with the need for speed and reliability in the last-mile delivery process, and what strategies can be used to optimize both?

Sahil: On our platform, we have implemented a status mapping system for orders. Each order goes through specific static statuses such as “new order,” “order ready for pickup,” “order in transit,” “order delivered,” or “order canceled.” 

This mapping ensures that regardless of the chosen delivery partner, both the e-commerce business and the customer have a unified view of the order’s progress. They can easily track the whereabouts of the product and access relevant information with timestamps.

One of the key advantages of our aggregation model is the competitive pricing offered by our integrated delivery partners. For example, in Nairobi, we can deliver anything within a five-kilometer radius for 184 shillings, regardless of the weight.

In contrast, other prominent companies charge significantly higher rates for similar services. Our merchants have attested to the competitiveness of our pricing, especially when considering the additional features and benefits we provide.

When merchants combine the cost of delivery with the value they receive from our platform, such as order management, free invoicing, warehousing services, and time saved from manual coordination with multiple delivery companies, they realize significant cost savings. 

By centralizing their operations through our platform, they no longer need to contact individual delivery companies but can instead rely on our customer service. When evaluating the overall value proposition, the savings extend far beyond just delivery costs, making it a more affordable and efficient solution.

On the flip side, what would you say is the biggest challenge with the Kenyan eCommerce market?

Sahil: In Kenya, the digitization of last-mile logistics remains a significant challenge. Many delivery companies still operate with manual systems, hindering seamless integration with e-commerce platforms. 

Addressing this issue requires a comprehensive digital transformation within the logistics industry, which is a goal I’m actively working towards. Although I cannot reveal the details at this stage, my efforts aim to drive the necessary digitization to streamline operations and enhance efficiency.

Another challenge lies in the prevailing habits of small merchants who are accustomed to relying on informal methods like contacting individual Boda Boda (motorcycle taxi) riders for deliveries. These merchants prioritize minimal cost savings rather than embracing more efficient processes. 

Educating and encouraging them to shift their focus from managing deliveries to growing their businesses becomes crucial. By imparting knowledge and highlighting the benefits of automated logistics solutions, we can help small merchants understand the value of investing in streamlined delivery operations.

While these challenges exist, they are manageable and surmountable. By leveraging technology, promoting digital transformation, and providing education, we can overcome these obstacles. 

What are your prospects or expectations from the industry, say, in the next couple of years? 

Sahil: The convergence of e-commerce and last-mile logistics in Africa is poised to drive several significant developments. Firstly, we can anticipate the emergence of more logistics aggregators, as well as companies specializing in swift hyperlocal deliveries. 

These firms will leverage digital technologies to streamline operations, offering a more efficient alternative to manual management processes. With the rising demand for e-commerce services, the need for seamless logistics solutions becomes increasingly paramount.

In parallel, the influx of venture capital funding into the logistics startup ecosystem is expected to accelerate. Venture capitalists, recognizing the immense potential in this sector, are directing their investments toward logistics ventures. 

This injection of capital will fuel innovation, bolster infrastructure development, and support the expansion of logistics networks. Consequently, logistics companies will have the means to enhance their capabilities, optimize delivery processes, and meet the evolving demands of e-commerce merchants and consumers.

One crucial catalyst for the e-commerce and logistics boom in Africa is the robust payment infrastructure that has taken shape. Overcoming previous challenges, the establishment of reliable payment gateways has facilitated the growth of e-commerce across the continent.

The post Investor Turned Founder, Sahil Affriya Looks To Disrupt Africa’s Last-mile Logistics appeared first on WeeTracker.