Pargo: Putting The Parcel In Your Corner

Tech start-up Pargo is a smart-logistics company that uses a network of pickup points at retail stores across Southern Africa to enable consumers, companies and couriers to send and receive parcels.

Lars Veul and Derk Hoekert first came to Cape Town in 2012 as part of the Groupon expansion, but after noticing the difficulties around last-mile deliveries in the country, they founded Pargo, an integrated logistics company that would provide all South Africans with access to convenient deliveries.

With scores of parcels going undelivered and a large amount of money being paid out in refunds at Groupon, the duo realised there was a gap in the market for a system that took the pain out of last-mile delivery.

“We would have up to 30% of refunds on a monthly basis, and not because customers didn’t want the parcel, but because couriers could not find the customers, or couldn’t deliver to the customers,” Lars explains. “We realised that a pickup point system would be a working solution, and that triggered the start of Pargo.”

This network allows businesses to easily deliver to their customers living anywhere in South Africa, and gives these customers the ability to collect their orders at their convenience.

The real challenge being faced by e-commerce companies is accessibility. A large portion of the population live in areas where there are poor infrastructure and no formal addresses. Even if customers live in urban areas, there is no guarantee that they will be at home to receive deliveries, due to long working hours.

While they operate in the delivery space, Lars sees Pargo as a technology company first and foremost. “We’ve built a logistics platform where we integrate different courier companies and warehouses. We have different APIs for different e-commerce platforms, and we also offer our clients bespoke delivery services. Though pickup point delivery is the main service, we also do home deliveries, as well as any other last-mile logistic service you can think of.

“Our core mission is to create accessibility, but also to enable e-commerce across the continent.”

A fully integrated solution

While it may sound like a lot of moving parts, Pargo’s logistics platform seamlessly integrates preferred courier companies, retail partners and consumers, making it a straightforward one-stop shop solution. Since Pargo launched, they have brought over 3 000 stores on board to act as pickup points for deliveries. They’ve done this through partnerships with some of the biggest retailers in the country, such as TFG, Clicks, Spar, Cape Union Mart, FreshStop at Caltex, and the Lewis Group, and around 700 SMEs and mom and-pop stores. The pay-off for the pickup points, of course, is footfall into their stores, while Pargo also has a revenue-share deal with them. The pickup points help to service 87% of all suburbs, towns and residential areas in the country.

“Our goal is to have a pickup point just a walk away from home, and the growth really has come from that increased demand from our clients who need to have this service.”

Pargo offers a fully integrated solution, which includes communication and management of the last-mile function, contributing massively to the local tech ecosystem. The company sits between the business, the customer, and the courier company, working with all three, as well as the so-called Pargo Pickup Points.

“Our system also helps to lower costs. A courier company will deliver to you wherever you ask them to, but that can often come with additional costs, whereas pickup points allow for flat rates through consolidated delivery.”

Huge impact and even more potential

Since its inception, Pargo has already achieved great success. They have consistently doubled the business year-on-year, and recently developed and launched new biodegradable packaging. They have also won a number of awards, including Founder of the Year at the Southern Africa Startup Awards.

Pargo is still firmly focused on South Africa, but has an eye on the rest of the continent, with Lars seeing huge potential in the e-commerce market. “What really attracted Derk and me, and what still drives us, is the huge impact that technology can make, and how over time, you can grow a business that is actually making a difference and touches a lot of people in the process.”

That kind of social impact was further evident when South Africa went into Level 5 lockdown last year, catching everybody by surprise, including universities around the country. “The universities needed to help a number of under-digitised students who returned home, many of whom did not have a laptop or the means to keep studying. How did they get that equipment to students in need?

“Throughout June to September last year, universities partnered with Pargo to send tens of thousands of study materials to students, and then back again, because they would need to pick up an assignment from a pickup point and then return it. It’s a simple solution, but it had a huge impact on a large number of people.”

The future lies in more options

Lars wants to take what they have already achieved a step further. “Solving the accessibility problem is just Step One for us, because in terms of e-commerce and delivery, convenience is really what it’s about. And in my opinion, this still doesn’t exist in the last-mile space. So really, as we’re growing the business, we are looking at adding that convenience.

“What we’re creating is functionality at the pickup point level. We want to give the consumer optionality and convenience. Whether that’s through click and collect, knowing what time your parcel will be delivered, or even home delivery, we want to make it possible.

“A big part of delivery logistics is returns, which we are also making possible through our pickup point network. Same-day delivery, and slowed-down delivery for customers to pay less, are also a big focus in the logistics space.

“Looking at the future, we aim to add all this functionality and more to make the logistics of an online order that much more pleasant and convenient than it is now.”

Judging by their growth to date, no doubt we will be seeing more optionality and convenience for the customer soon.

Reposted from Wesgro Pioneers In The Cape Tech Industry 4th Edition, October 2021.

Written by Rob Peters.