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How to crack SA’s largest untapped market

Around the world, township communities have historically been largely ignored by businesses. This is beginning to change, however, as corporates and organisations are taking note of the potential within this untapped market ‒ and using good business sense to boost communities in the process.

Take Piramal Sarvajal, for example. In India’s slums and underprivileged communities where safe drinking water is a scarce commodity, this mission-driven social enterprise is using technology to  ensure that the underserved have access to this basic necessity.

One of their solutions is water ATMs that provide 24/7 access to safe and affordable drinking water. These dispensers are off the grid thanks to solar power and cloud connected to enable remote tracking of consumption and water quality. What’s more, Sarvajal enlists the help of franchisees, or ‘water entrepreneurs’, in communities to boost the local economy.

In Brazil’s favelas, many businesses are offering microfinance partnerships, loans and services to community entrepreneurs. Access to financial services has long been an issue in these impoverished areas. One business that aims to combat this is the community-run Bank of Paraisopolis in south São Paulo, which serves the Paraisopolis favela. It has even created a new currency to ensure greater financial stability for local residents and businesses.

Closer to home, Cape-based tech startup Yebo Fresh has paved the way with an innovative online shopping service that delivers fresh produce and household goods to areas that are predominantly unserved by formal retailers. To drive prices down and quality up, the business partners with local manufacturers to ensure an accessible, affordable and continuously-growing product offering.

“There is demand for services in townships and rural areas ‒ as there is anywhere else. It is a market that has yet to be fully tapped into. In doing so, businesses don’t just fulfil a need in these communities. These services create jobs, and therefore assist to create a more affluent society overall,” shares Bongi Mofomate, Head of Operations for Yebo Fresh.

The business started simply, in the garage of founder Jessica Boonstra’s home in 2018, and has since expanded to a 1200 sqm warehouse and 50 permanent and casual employees. The pandemic proved to be a catalyst for growth, driving the business forward to hundreds of daily orders from just a couple of hundred a month. While the service was initially available to just a few townships, it has since opened up delivery to all areas within 40km of Cape Town’s central business district.

In a similar vein, online fashion etailer RunwaySale makes quality, high-end brands affordable to a broader South African market. The business offers premium designer labels at significantly lower prices than in-store, giving more consumers access to  high quality fashion.

“We have seen a considerable jump in online shopping stats since the start of the pandemic. Our sales from residents in the townships  has followed this trend and has doubled in the last year,” says RunwaySale Chief Operating Officer Rob Noble.

He adds that one of the key factors to seeing success in these areas is a strong focus on accessible technologies, especially mobile devices.

Embracing widely-used platforms, Mofomate agrees, is key to serving the township market. Yebo Fresh customers (be it private households, spazas or township restaurants) can order via SMS, WhatsApp, Facebook, or through the website. She further attributes Yebo Fresh’s success to the company’s hyper-local approach and putting people at the centre of the business.

“Often a permanent physical address isn’t available in the areas we deliver to, so it can be a time-consuming endeavor. To navigate these areas, and ensure we can deliver with just a pin on Google Maps or a description of the home or business’s location, we recruit and train people who live in the community and know it better than anyone,” Mofomate explains.

“They are delivering to people they know and making a direct impact on their community. They are also a direct line to finding out what our consumers want and need. Engaging with and receiving feedback from our customers is vital to the success of our business. Yebo Fresh exists because of them. We are meeting their demand.”

With this in mind, the business holds regular focus groups to improve their product offerings and ensure they are continuously catering to people’s most important needs. Mofomate explains that, in the current economy, with ever-changing regulations and a very real danger in travelling in taxis to get to a shop, this is more essential than ever before. That, and always remaining agile as a business.

The company has seen significant success through these strategies in the Cape Town market and now, thanks to recent rapid growth, the door is open for national expansion.

“Conducting business in townships does, of course, have its own set of unique challenges. That said, it is a worthwhile market to pursue on a number of fronts,” Mofomate says.

“Wherever something is lacking or unavailable, it just means that there is potential for innovation. And where there is potential, there are economic opportunities. Businesses just need to become more creative.”

This article was first published by iAfrica on the 29 January 2021. 

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