It’s no secret that e-commerce growth in Africa, like the rest of the world, has seen a massive spike since the pandemic. More businesses invest in infrastructures and platforms that enable them to sell to customers via a mobile device or a computer system. Technology is certainly a major force, but there is one other. 3PLs (third-party logistics) providers come a close second in facilitating the e-commerce expansion.
If you think about it, aside from the technology that provides the platform, logistics is the force making e-commerce possible. Remember, it is no longer commerce if you cannot get the goods to the consumer. As much as these businesses invested in getting the e-commerce platforms right, they also had to ensure that the logistics (Aka last mile delivery) was also gotten right.
While very few invested in their own logistics infrastructure, others leveraged 3PL (third-party logistics) providers. 3PLs provided a means for businesses to focus on improving core business processes while outsourcing the logistics arm of it. You can’t blame them; logistics, especially in Africa, can be complicated. From insecurity to poor infrastructures and the cost of maintenance of vehicles. Many did not want to go near it.
Maybe that was why e-commerce experienced such a slow start before the pandemic. As more 3PLs came on board, it allowed businesses to enter the e-commerce game without having to deal directly with logistics operations.
In this article, we will explore how exactly 3PL drove e-commerce expansion across Africa.
1. Bridging The Infrastructure and Warehousing Gap
Many African e-commerce businesses are small or medium enterprises. And they lack the resources to invest in building their own warehouses or distribution networks. Remember that many African countries lack the infrastructure to ensure seamless transportation of goods and services.
For the most part, it can be really challenging to overcome the two challenges. However, with 3PLs, there was a cost-effective solution. By providing access to resources and a network of warehouses strategically located to enable businesses to store inventory closer to their customers. These 3PLs were also instrumental in facilitating faster deliveries.
2. Improved Delivery Efficiency
Because of the infrastructural problems plaguing much of the African continent, on-time delivery and efficiency seemed like a far-fetched solution. Well, until more 3PLs focusing on last-mile delivery came on the scene.
These 3PLs can leverage their expertise in route planning, fleet management, and last-mile delivery solutions. This way, they can ensure businesses look good to their customers across the continent by delivering products efficiently and when needed.
These 3PLs also leverage the economics of scale to ensure that the delivery cost is cheaper for businesses and their customers. They typically have relationships with carriers (last-mile riding companies) and other distributing partners. The 3PLs leverage these relationships and negotiate for lower rates through the economics of scale principle, allowing for competitive delivery options.
3. Cash on Delivery (COD) Management
One issue the e-commerce systems had was that customers wanted to pay cash on delivery. That is, they were uncomfortable paying for products they could not get. For a long time, it was a hinderance to e-commerce growth on the continent. Well, that was until the introduction of cash on delivery.
Businesses also entrusted 3PLs with collecting cash payments upon most of these deliveries by encouraging cash on delivery. Then, these 3PLs ensure secure remittance of the proceeds to the businesses selling to the customers. They serve as a go-between. Giving customers a more comfortable option and offering businesses a way to sell without worrying about customers not paying on time.
Ultimately, it has led to more e-commerce sales and growth.
4. Technology Adoption and Integration
Like its role in developing and managing e-commerce platforms, technology has also come in handy for 3PLs. It has allowed them to invest in technology solutions like warehouse management systems (WMS) and order fulfilment software. These allowed for seamless order fulfilment operations.
The 3PLs can now integrate with most of these e-commerce platforms seamlessly, allowing them to receive, process, and deliver orders efficiently. Technology solutions have also enabled shipment tracking in real-time across the supply chain. It facilitates transparency, which means customers and businesses are in the loop with real-time information on each order being processed.
5. Scalability and Flexibility
Many e-commerce businesses experience fluctuations in demand. Especially considering the economic crunch plaguing much of the continent. With 3PLs, you have logistics providers that can help these e-commerce platforms scale their operations.
Businesses only pay for warehousing, logistics, and fulfilment services when they have demands to meet. This way, they can effectively eliminate the burden of fixed costs.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
