SA “virtual distribution platform” Selpal set to integrate supply chains nationwide

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South African startup Selpal, a “virtual distribution platform” that provides an electronically enabled route to market for FMCG manufacturers and financial service providers, is planning nationwide expansion after raising funding from FirstRand Group at the end of last year.

Founded 2013, the Gauteng-based Selpal integrates the entire supply chain – from manufacturer all the way down to the end customer who is shopping with an informal retailer in a township. 

For the store trader, informal retailers running spazas, tuckshops, taverns, bottle stores and shebeens, Selpal provides a smart PoS device free of charge. This device has basic PoS functionality, and enables the retailer to sell a full suite of virtual products, such as airtime, data, electricity, and DStv, and enables Selpal’s “Store Traders Vault Wallet”. 

“The Vault Wallet is an e-wallet that we have developed that provides the store trader with as much financial functionality as we are able without being a bank. Funding the Vault Wallet acts as the working capital for the virtual products – which are all pre-paid – and enables the store trader to pay his suppliers electronically without using cash,” Stephen Goldberg, chief executive officer (CEO) of Selpal, told Disrupt Africa.

Store traders are able to view the products of their suppliers, order electronically, and pay without using cash – before delivery or on delivery. 

“We also have a loyalty scheme for customers that is electronically controlled and authenticated. Think of it as the eBucks of the township,” said Goldberg.

Selpal also helps suppliers and wholesalers, enabling them to buy products from their suppliers, or the product manufacturers, as well as sell their products to store traders via Selpal’s view-order-pay functionality. The startup has built an electronic catalogue system that allows any supplier in the system to publish their catalogue to any of their customers that they choose, and an electronic ordering system that allows orders to be placed.

For manufacturers, the likes of Simba, Clover, Pioneer, RB and others, Selpal offers full data throughout the supply chain. 

“This includes basket data, customer profiles and clear understanding of the full value chain. We also offer cash management services – taking cash off cash vans and trucks – and minimising the cost and risk of cash. We offer a marketing service – advertising the products for sale and pricing to the relevant customers at each level of the supply chain,” Goldberg said.

“We also offer our “Dollas” loyalty programme which gives the manufacturer a verifiable loyalty scheme that puts value directly in the hands of the traders who sell the products and the customers who buy the products.”

Selpal, meanwhile, has built the necessary cash management infrastructure in all of the 18 Gauteng-based townships in which it operates, and currently enables cashless payments for large wholesalers, multinationals and more. Goldberg said the startup has seen strong uptake, and usage is growing.

“Funding into our e-wallets is significant, given our current scale, and growing at double digits month on month. Electronic ordering and cashless payments significantly reduce the risk and cost for each level in the supply chain that uses this functionality,” he said.

“We have been very happy with the uptake and the “stickiness” of Selpal. We are rolling out as fast as we can roll out our devices to store traders.”

This growth, and the national expansion Goldberg says Selpal will soon embark on, has been aided by a funding round secured at the end of 2018 from FirstRand Group, through one of its private equity investment subsidiaries. This was a highlight of the startup’s journey so far, said the CEO. 

“With the know-how and financial muscle that FirstRand brings, together with our understanding of the unseen market, we believe that we can fundamentally change the business landscape in the townships and create massive value for all the participants in our ecosystem,” said Goldberg.

Selpal, which makes transactional revenues on payments made through its platform, has faced obstacles in terms of establishing trust and credibility with customers and users.

“When offering a new product or service to a sceptical market doing what you say and saying what you do over and over is key to getting traction,” Goldberg said.

That approach has begun to pay off, and the startup sees a major opportunity it will now attempt to grasp across South Africa.

“We have an “unseen” economy that operates in our townships. This is a very substantial market that operates on its own system and in its own way. We saw an opportunity to bridge the “seen” economy – with the benefits that it offers and the “unseen” economy – which is huge and growing,” said Goldberg. 

“In the unseen space there is a huge demand for inclusion in the formal financial system but with partners that this market trust and using products that are adapted for the needs of this market. We see ourselves as this bridge. We are connecting the largest corporates in South Africa to the township consumers and creating understanding on both sides. This understanding can be translated into value and inclusion for township consumers and businesses.”

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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