Zuzela is a Port Elizabeth based business-to-business (B2B) ecommerce startup that connects spaza shops or micro-retailers in South Africa with brands and distributors on a sales app. Zuzela is making it easier for spaza shops to purchase products at affordable prices — increasing product visibility and price transparency in townships. The startup was founded by Trevor Myburgh earlier this year.
How does it work?
Products on the platform are organised by suppliers, and Informal traders can place their order on the app, collect their goods, or receive delivery directly from suppliers and brand owners. Suppliers charge a delivery fee ranging from R30 ($1.71) to R100 ($5.68) and also set a minimum order value to qualify for delivery.
Zuzela works with brand owners and suppliers, ranging from Premier Milling, Albany Bakery, Simba, Twizza, and Henties Juice, to local wholesalers. They also supply meat and fresh produce, and are in negotiation with national cash and carry distributors. National brands, smaller FMCG companies, and suppliers that lack the necessary infrastructure and “line of sight” in townships can benefit greatly from apps such as Zuzela, said Myburgh in an interview.
Boots on the ground
The startup employs a sales force and has divided Port Elizabeth into nine sub-zones. Each zonal leader is responsible for customer acquisition, education and training. “It’s very important to get users comfortable with the app, ” said Myburgh. The zonal leader is also responsible for activating the customer’s e-wallet — enabling traders to order cashless from suppliers. Zuzela is currently focusing on servicing Port Elizabeth in the Eastern Cape but considering national expansion.
Informal retail challenge
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. Spaza shops and townships remain undeserved and were historically ignored by the consumer goods sector as low in value and difficult to service.
For many FMCG companies, it is often too expressive to service informal markets directly, and the market is mostly covered by national, local cash and cash distributors, and large wholesalers. Large FMCG companies have strong working relationships with cash and carry distributors and wholesalers, and breaking into this market takes time, resources, and education according to Myburgh.
Small independent Informal traders purchase stock from a range of suppliers, not knowing if they always get the best deals. “Some outlets might drive 20 kilometres to save R5 ($0.28) on a product carton,” said Myburgh.
Some larger spaza shops or superettes (small supermarkets) have strong relationships with upstream wholesalers, and some are vertically integrated into the wholesale network. According to Zuzela, close to 80 percent of the spazas they work with are foreign-owned and controlled.
South Africa has seen a significant increase in the number of foreigners setting up shop in recent years. Foreign traders from countries such as Somalia, Ethiopia and Bangladesh are dominating the informal retail landscape, and many smaller South African shop owners have exited the retail sector in townships.