SA's delivery firms switch to meds, groceries during pandemic
- Staff Writer: Nqobile Dludla and Mfuneko Toyana
A solitary motorbike rumbles through otherwise silent streets in Johannesburg, South Africa’s once bustling commercial hub, now transformed into a near ghost town by one of the world’s strictest coronavirus lockdowns.
A few months ago its driver, like most others in the city, would probably have been delivering fast food like fried chicken or burgers to convenience-seeking consumers.
Now, as Africa’s most advanced economy groans under the weight of the pandemic, delivery firms have found a lifeline in dispatching essential goods instead.
With restaurants and retail businesses shut, it’s a strategy firms like Naspers-controlled MrD Food, Uber Eats, Netflorist, ride-hailing app Bolt, and drinks seller BOTTLES hope will ensure their survival.
It could also leave them well positioned to profit from a rapid shift to online shopping which, though accelerating even before the pandemic, had lagged behind most developed economies.
“It was a no-brainer for us,” said BOTTLES co-founder and co-chief executive Vincent Viviers. While alcohol sales are banned under South Africa’s lockdown restrictions, the online bottle shop said it has seen delivery volumes treble since it switched to offering basic goods.
It capitalised on its existing partnership with supermarket chain Pick n Pay to get out ahead of its larger competitors by offering a same-day delivery service.
In Europe and the United States, Uber Technologies-owned Uber Eats, Grubhub and Just Eat Takeaway have offered incentives to restaurants and forged partnerships to improve their cash flow during the crisis.
Such moves are not possible in South Africa, where the government has ordered restaurants closed during its five-week-old lockdown.
Instead, Uber Eats has replaced fast food deliveries with groceries, frozen foods, medication, and personal care items like shower gel and hand sanitiser, all of which are classified by the authorities as essential.
The San Francisco-based firm has also re-styled its ride hailing app to serve businesses in addition to passengers, adding on-demand and scheduled deliveries.
Its rival Bolt launched a similar service for businesses, saying its drivers could use the platform to replace the income they are losing during the lockdown.
Those deliveries are keeping firms in business, but times are still tough.
While the trade in essential goods is picking up, food delivery service MrD, owned by e-commerce giant Takealot, said it was still only doing a fraction of its normal volumes despite a partnership with pharma-chain MediRite and convenience stores.
And Patrick Mwanje, a delivery agent for Uber Eats, said his delivery figures have fallen sharply during the lockdown.
“Delivering groceries is better than nothing,” he told Reuters. “Right now I’m relying on tips to survive.”
A loosening of South Africa’s lockdown restrictions is expected to allow restaurants to reopen, though only for deliveries, from May 1. That should bring some relief.
But that doesn’t mean delivery services will be going back to focusing on food. And they may not want to.
Compared to developed markets like the United States, where consumers now buy everything from toilet paper to washing machines with a click of a button, online shopping in South Africa is still in its infancy. But it is growing.
Over half of South Africans now engage in online shopping. And in an economy that had seen growth stagnate even before the pandemic, e-commerce has been a rare bright spot, with annual revenue growth of nearly 7%.
A survey by Nielsen conducted in early April found 37% more South Africans were shopping online during the lockdown period. And some analysts, like Standard Bank’s Derick de Vries, believe it’s a trend that will outlive the pandemic.
“The impact of the virus is shaping consumer behaviour and we are witnessing a significant increase in e-commerce activity and demand for home delivery,” he said in a note last week.
“For businesses to remain viable going forward, they will need an online extension of their business.” (Reporting by Nqobile Dludla and Mfuneko Toyana; Editing by Promit Mukherjee, Joe Bavier and Jan Harvey)
* Five-week lockdown banned sales of “non essentials”
* Uber, rivals switch from fast food to groceries, medicines
* Online shopping up 37% as consumers prefer online
* Change in strategy not enough to recoup lost revenues