Selpal connects informal traders to suppliers with a digital distribution platform and provides dealers with a point-of-sale device — enabling them to sell virtual products such as airtime, electricity, and insurance in South African townships.
The startup’s electronic catalogue system allows suppliers to advertise their products, prices, and run promotions. It offers an online marketplace where informal traders can purchase physical goods, such as groceries.
For customers, Selpal’s eWallet offers traders the ability to store cash and make transactions. Acting as working capital, informal traders can pay suppliers electronically without using cash. The startup also provides a customer loyalty scheme or “Dollas”, giving them a chance to earn loyalty points when making purchases on the system.
Selpal offers an integrated supply chain that facilitates transactions between suppliers and traders. They provide cash management services for large wholesalers and consumer goods companies — eliminating the need to carry cash on delivery trucks and vans — and reducing the risk and cost of cash-in-transit in townships.
Multinationals, such as Procter & Gamble and Pioneer Foods, benefit from Selpal’s outlet data and improve supply chain visibility. Informal traders are mostly not in direct contact with FMCG companies, and outlets are often unregistered and serviced by wholesalers — leaving brand owners with limited customer insights.
Selpal was confounded by CEO Stephen Goldberg in 2012 and is operating in 18 Gauteng townships — servicing more than 10,000 traders. The startup sees itself as a bridge between the formal and the informal economy — connecting multinationals and large wholesalers to traditional trade. Selpal is planning a nationwide expansion after receiving funding from FirstRand Group last year.
Financial institutions don’t typically work with small informal retailers, as they mostly trade in cash and have no financial footprint to determine their creditworthiness. Assigning credit scores are difficult and extending loans are risky.
First National Bank (FNB is part of the FirstRand Group) wants to leverage Selpal’s platform to better understand the informal market, and to offer informal traders financial services such as bank accounts and credit facilities. FNB is expanding its footprint in townships, and in 2019 launched a business account with zero monthly fees — with clients only paying for selected services.
Township businesses were historically ignored by the South African banking sector as too risky and low in value. However, a growing population and a vibrant business community is making it an attractive market for banks. Traditional trade is estimated to contribute around 35 percent of total grocery sales in South Africa, with 50 percent of South Africa’s urban population living in townships.