The last mile in South Africa: how delivery + logistics firms are stepping up

Optimising customer journeys and payment flows are critical parts of enabling e-commerce businesses to attract and retain customers, but none of this matters if the parcel never arrives. 

At our recent Scale Summit, we brought together a panel titled The last mile: innovation in logistics, delivery and marketplaces in an increasingly on-demand environment to discuss the vital role that delivery and logistics plays in enabling South Africa’s retail ecosystem. Watch the full panel here.

The panel featured Donald Valoyi, CEO of Zulzi (on-demand groceries from dark stores), Sureen du Toit, Head of Paxi at PEP (national pickup and returns network), and Craig Pitchers, CEO of The Courier Guy (nationwide parcel delivery) to unpack what it takes to make last-mile logistics work in South Africa, moderated by Robert Lee, Strategic Growth Manager at Stitch. Here are their key takeaways. 

The last mile starts long before the driver does

For on-demand groceries, the final delivery experience is critical, and small details determine whether the final delivery delights or disappoints the customer. However, what goes into the cart after the order is placed can be just as important as how quickly and reliably it arrives.

That means these firms need to be optimising the experience from the moment an order is placed, including accurate stock availability, as well as making it easy for customers to instantly select quality substitutions in the event a requested item is out of stock. 

To this end, Zulzi has built optimal picker workflows, ensured stock visibility and enabled instant customer communications to remove out-of-stock surprises. They then pushed customer control even further by building up their dark-store inventory (dark stores = retail locations used to fulfill online orders only), to fill in any geographical gaps.

Implications

• Treat picking, stock accuracy and substitution rules as table stakes for successful last-mile operations, rather than back-office tasks. Customers will remember if they receive the wrong or missing items as much as, if not more than, they will other elements like speed of delivery
• Suppress or remove unavailable items in real time. Notify the customer, and suggest or swap items before the picker leaves the store.

Speed, reliability and cost effectiveness are a portfolio; not a single promise

Consumer expectations vary depending on the business promise and whether the customer values metrics like speed and reliability vs others like price. It’s therefore important for last mile logistics businesses to offer more options to customers, which gives them some control over their experience and ensures they have realistic expectations.

For example, The Courier Guy offers multiple speed options at different prices – same-day, next-day, two-day, lockers and counter services – then optimises for predictability as the first quality metric, with speed a close second. 

PAXI follows a similar pattern: they ensure their counter pickup offering is reliable, and have also added store-to-home and business-to-door delivery offerings so that customers can choose the right price-speed point for their needs.

Implications

• Offer a ladder of services, priced according to urgency and distance, that customers can choose from depending on their needs. 
• Measure and publish predictability windows, not just averages, to help customers manage their expectations accurately. 

Is on-demand sustainable? It depends on density and basket size

On-demand delivery works where order density and item economics justify it. Groceries and alcohol in high volumes are viable whereas low-value or niche items with sparse demand are not. The panel discussed a few levers that can improve viability of on-demand services:

1. Retail media, sponsored listings and brand placements on high-intent carts, which can add a meaningful revenue layer.
2. Hyperlocal focus, which might include the decision to close underperforming zones, and going deeper where frequency and density are high.

Implications

• Model unit economics by location, hour, and category. Scale where density and gross margin cover routing and failure costs.
• Use retail media and advertising thoughtfully: ensure that the UX experience is still smooth and cap the amount of ads to avoid overwhelming customers. A good example is the recent addition of in-trip ads Uber launched in South Africa this year, which is careful not to take users away from the task at hand and important trip information

Leveraging AI for prediction and batching

Zulzi uses AI to predict upcoming demand in a particular neighbourhood and then pre-batches likely items on the delivery bike. In some areas, this had made 10-minute deliveries a common occurrence. 

According to Zulzi CEO Donald Valoyi, once consumers experience true on-demand delivery services, they rarely accept three-day cycles again.

Implication

• Use buying data to forecast per micro-area and pre-pack fast-moving items or items in high demand.

Trust is built on consistency, transparency, and people

When it comes to measuring and growing trust, Craig Pitchers from The Courier Guy highlighted metrics like NPS, first-attempt success and on-time rates. To him and The Courier Guy team, even two percent failure to deliver on time is considered noisy. 

According to Sureen du Toit, PAXI’s difference is human: They have 20,000 in-store “dynamos”– in-store personnel – as first and last touch, which powers trust in communities where face-to-face handover matters.

Implications

• Track first-attempt delivery, not just eventual delivery.
• Invest in frontline training and a team that customers can come to rely on.
  
  

South Africa’s context shapes the route

Imported “optimal” routing, such as the routes that might appear on Google Maps, often ignores boomed roads, gated communities, hospital restrictions and local safety realities. 

According to all three panelists, local teams that know micro-areas and build relationships with security and building managers outperform generic algorithms.

Implications

• Blend algorithmic routing with local knowledge graphs and delivery-agent feedback loops.
• Adjust operating windows and safety protocols by location, time and risk.
  
  

Reverse logistics and return experience plays a factor in whether customers try again

As e-commerce continues to grow, returns are also rising. Return rates differ by category: in markets like Europe, apparel can hit 25–30% return rates, while grocery returns remain low. South Africa is earlier on the curve than Europe, but the infrastructure matters now. 

PAXI’s tokenised returns have allowed them to turn 2,800 PEP group locations into a national returns grid, so customers are able to log a return however and wherever is most convenient to them.  

Zulzi’s main approach is to reduce returns with upstream accuracy, such as barcode checks, weight checks and security controls before dispatch.

Implications

• Offer an out-of-home option for returns: counters and lockers like those offered by The Courier Guy close the “nobody home” loop.
• Tie refunds to return scan events to shorten the cash-flow pain for consumers. Ensure refunds are fast, seamless and automated to prevent delay
  
  

Key takeaways

• Design last mile from the shelf forward: Features like live availability, substitution logic and rapid replacement offerings for out of stock items reduce downstream failures.
• Offer a service ladder to give options based on preference: Offering options like same-day, next-day, lockers, counters, store-to-home, priced and promised clearly gives customers control over their experience and manages expectations. 
• Grow where density lives: Use data to help prioritise particular city locations, items and relevant times of day, rather than trying to offer everything everywhere.
• Monetise responsibly: Retail advertising can help unit economics, but keep relevance high and avoid overwhelming the customer.
• Make returns easy: Offer a variety of ways for customers to log a return, and make each one seamless. This includes pick-up services, tokenised returns, and return counters and lockers. 
• Localise routing: Combine local expertise with algorithm-optimised routing suggestions to ensure efficient delivery and driver safety. 
• Measure the right things: Metrics like first-attempt success, predictability windows, NPS, and exception recovery time are all strong indicators of how well the delivery system is performing.
  
  

Stitch serves businesses like The Courier Guy in the delivery and logistics space with a variety of payment methods such as card and Pay by bank, as well as automated refunds. We solve for complicated payment flows that can disrupt or delay service, such as pre-authorisations, payment links in the event of extra charges, and now, Capitec Pay VRP for Capitec users.

Get in touch with the team to learn more.

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