Logistics Costs A Big Hurdle To Online Shopping Growth In South Africa

This is according to the Eye on the Last Mile South Africa Report 2024 by FarEye , a developer of last-mile logistics technology, which surveyed more than 300 business leaders specialising in delivery logistics. This is the third version of the report, but the first to give South African-specific insights.

"With favourable government policies, a rising middle class, an aspirational high-income segment who wants to go out and spend in the market, and reduced inflationary pressures, South Africa has all the ingredients to have tremendous e-commerce growth in the next five years," said Kushal Nahata , co-founder and CEO of FarEye , at an event in Johannesburg on Tuesday.

"To solve for cost, learning from those who have already gone through the journey is important, but global solutions will not necessarily work in the South African context."

According to the report, 100 of survey respondents cited inflation as the topmost factor in their minds, meaning "it is to be anticipated that a lot of decision making revolves around cost". FarEye identified fuel, safety and security as the three major cost drivers for last-mile logistics operators.

Ranked against other factors - including managing couriers, managing returns, dispatching and routing, and scalability - cost was highlighted as the most significant challenge, said the report. The next highest concerns were scalability and adaptability.