South Africa needs the Post Office, e-commerce pioneer says

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Donald Valoyi believes the Post Office can play an important role in supporting e-commerce growth in South Africa, even as the struggling state-owned company faces the prospect of going to the wall.

Founder and CEO of online store Zulzi Donald Valoyi said the Post Office should be brought out of business rescue and revived so it can help drive e-commerce adoption across the country, especially in rural and more outlying areas.

Speaking on an episode of TechCentral Show (TCS) to be published later this week, Valoyi said government “must come to the party” to help drive the cost of deliveries down so that non-suburban customers are not priced out of participating in the online shopping boom.

“I still believe that one day the Post Office can be revived to help with logistics, because if you look globally, Amazon in the US does not deliver everything by itself, so making use of those facilities can actually help reduce costs,” he said.

“It would be a mistake for us as South Africans if we don’t move with everyone in this revolution. If we can do more in trying to build better infrastructure, that can help in trying to reduce the cost,” Valoyi told TCS.

Zulzi was founded in 2023 as an online shopping aggregator. Today, the intellectual property and technology that went into building the Zulzi platform forms a big part of the Checkers Sixty60 application, while Zulzi continues to operate as a standalone e-commerce platform with seven of its own “dark stores”, which are used to hold inventory.

Dysfunction

While it is true that large e-commerce retailers like Amazon in markets such as the US and UK leverage postal services to handle deliveries – reducing costs – the situation in South Africa is more complex due to the dysfunction at Post Office.

Earlier this month, Post Office business rescue practitioners Anoosh Rooplal and Juanita Damons told parliament that the company will be forced into liquidation by as soon as October if it doesn’t get a R3.8-billion bailout from national treasury. R2.4-billion in taxpayer monies was already handed to the Post Office when business rescue proceedings began in July 2023.

According to Rooplal and Damons, the business rescue process has helped improve the company’s net asset value from a negative R7.9-billion in June 2023 to R840-million in June 2024. The staff headcount has also been reduced from just over 11 000 to some 4 800 workers. The number of branches has also been reduced, almost in half, from 657 to 366.

The turnaround plan involves upgrading Post Office IT systems and logistics infrastructure as part of a strategy to shift its revenue mix to include more activity from digital channels and financial services. These interventions could potentially put the Post Office in a position to play the supporting role to the e-commerce sector that Valoyi envisions, but other challenges, including a skills shortage and corruption, must also be dealt with.

Read: Amazon South Africa got off to a slow start – but don’t write it off

Valoyi said foreign competitors in e-commerce in South Africa, including China’s Temu and Shein, are making efforts to deliver to rural and outlying areas, giving them a competitive edge.

“Ultimately what we need is to ensure that people in remote areas can still have access [to e-commerce]. The biggest question when delivering to remote areas is, ‘How can I deliver goods here at a reasonable price?’” asked Valoyi. – © 2024 NewsCentral Media