Spazapp aims for a Cape expansion drive

2017-12-10 06:01 - Justin Brown
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Johannesburg - Start-up Spazapp – a free mobile app that enables informal traders to buy directly in bulk from large suppliers – was looking to launch in the Western and Eastern Cape, adding to its growing footholds in KwaZulu-Natal and Gauteng, CEO Tim Strang said this week.

Launched two years ago in Durban, the company has a presence in Soweto, Tembisa and Alexandra in Gauteng, and in Umlazi and KwaMashu in KwaZulu-Natal.

Strang, who is Spazapp’s controlling shareholder, told City Press: “We do not own trucks; we do not own a wholesaler – we leverage the technology to get the best possible pricing for the store owners.”

Spazapp comprises three key elements: ecommerce, where orders can be placed; value-added services such as money market services and insurance; and “brand connect”, which allows companies to communicate directly with spaza shop owners and get information from them via surveys.

Spazapp enables informal shop owners to lower their costs considerably through its bulk-buying technology and value-added services, says Strang.

“Delivery alone saves them money. Traditionally, they would have to close their shops, hire a bakkie, go to the shops and bring their groceries back themselves.”

In September 2016, the company received venture capital funding from Kingson Capital.

This enabled Strang and his business partner, Byron Verreyne, who is responsible for the company’s technology, to work on the business full time.

Since its launch in February, Spazapp “has grown really, really fast” to service 4 500 micro businesses within the first four months, Strang said, adding that there were an estimated 160 000 informal shops across the country.

As part of his Eastern Cape launch plans, Strang intends setting up first in East London and then in Umtata, while in the Western Cape, he is looking to launch in Khayelitsha.

By the end of 2018, Spazapp would like to reach as many as 20 000 informal stores.

Strang said Spazapp made most of its money out of its brand connect offering as well as its value-added services, with sales and deliveries via the app being less of a contributor to the platform’s earnings.

“We do not just look at spaza shops – we look at anything in the informal market. Whether it’s informal gyms, spaza shops, salons or takeaway outlets, we have them all on our platform.”

The valued-added service enables informal traders and convenience store owners to sell anything from airtime, data and electricity to subscriptions to DStv, Lotto tickets and short-term insurance policies. Users can also pay their municipality bills.

Spazapp is looking to expand its platform into the rest of Africa by launching part or all of its services in Botswana, Ghana, Mauritius, Mozambique, Namibia, Nigeria, Sierra Leone, Tanzania, Uganda, Zimbabwe and Zambia.

Spazapp represents the brands of five major companies: hair products company Amka and fast-moving consumer goods companies Unilever, Johnson & Johnson, Tiger Brands and Philip Morris.

According to Strang, Spazapp has broken even.

The entire Spazapp operation is supported by service agents called “sparks”, who help sign up new informal shopkeeper clients.

This is a self-employment programme aimed at the youth.

“There are three levels of Spaza sparks. First up are the sparks – they are our agents, working on a commission structure.

"They live in the townships in which we have a presence and are thus the face of the brand in informal markets. We have signed up 400 sparks over the past six months.”

Then come the fire-starter sparks, who market the brands and get stock into informal stores.

Those agents that “are able to lead and understand the full complexity of the project” move on up to become power sparks, who manage the other sparks.

Currently, there are five fire starters and 12 power sparks, all of whom are employed directly by Spazapp.

Spazapp’s total permanent staff count is 23.

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