The Uber for deliveries | Fin24

The Uber for deliveries

Sep 14 2018 10:53
Glenneis Kriel

Growing awareness of the massive demand for delivery vehicles in Gauteng led to Khathutshelo Mufamadi starting Droppa, a company through which people can rent out their bakkies or trucks on an ad-hoc basis.   

“While working fulltime as a computer programmer at a bank, I bought a Kia k2700 truck and later a Nissan bakkie to do deliveries for my sister’s events equipment rental business,” says Mufamadi. 

“This on-the-side business snowballed until I could no longer keep up with demand, which gave me the idea to start a bakkie and truck hiring company similar to Uber.”

Mufamadi started the company in February 2016, with personal savings and seed capital from Mlab South Africa and IM IN Accelerator.

Since then, the company has signed up more than 120 bakkies and trucks, the majority recruited through advertisements on online advertising sites. 

“To participate, positive identification, a valid driver’s licence and vehicles with a mileage of no more than 180 000km are required,” Mufamadi says.  

Some of the owners drive the bakkies themselves, while others employ drivers to do so for them. 

The majority of the vehicles are used exclusively for deliveries, with Droppa helping owners to expand their existing services. Currently about 50 deliveries are made each month, primarily in suburbs.  

“The business model appeals to bakkie and truck owners, as it allows them to make additional money from an asset they already have. It is also convenient to them, as they do not have to carry the overheads associated with having their own business. We take care of everything, from the marketing, admin, processing of payments to bookings and enquiries,” Mufamadi says.    

Multi-tiered service

While a lot of money and time have been invested into the development of the Droppa App for cellphones, it turned out that many of Droppa’s clients prefer booking directly online. 

The company’s services for this reason had to be expanded to accommodate these clients. 

“Most of our client base grew from my and other vehicle owners’ existing client networks. Educating and motivating conventional customers to use the app proved much more challenging than I thought it would be. As a matter of fact, if I knew then what I know now, I would have put more money into market research and the marketing of the product than what I have spent on technological development,” Mufamadi admits.

At the moment, there is not much competition in the market, says Mufamadi. “Droppa’s main advantage is that we have low overheads, which allow us to charge 15% to 20% cheaper than our competitors. 

We are also able to cut down the hustle by getting quotes and a vetted driver in a very short time.” 

App users get an instant online estimate of the cost of the delivery.

Clients are charged a base rate to make short distance deliveries worthwhile for vehicle owners, in addition to a set rate per kilometre which depends on the vehicle size and distance travelled. 

Fifteen percent of the payment goes to Droppa, while the rest is paid weekly to vehicle owners.

Plans for the future
The most difficult part of getting the business off the ground so far, is to get start-up and operational funding. “Getting a big idea like this off the ground is expensive. I am trying to raise another R5m to help me roll the business out to the rest of the country.” 

He is currently testing the Cape Town market, which he wants to break into before the end of the year:

“Cape Town is the biggest adaptor to technology in the country, so I think the city and its suburbs would be more open to our service. Later next year, I want to move into other cities with large populations, such as Durban and Port Elizabeth,” he says. 

The company will be rolling out another online platform, Droppa for Retailers, in September 2018 to allow furniture shop owners, warehouses, hardware and small businesses to also make use of Droppa bakkies and trucks for deliveries.   

This article originally appeared in the 13 September edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

transport  |  entrepeneur

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