tunnelSouth African parcel delivery platform has secured $1 million in pre-seed funding from investors including Founders Factory Africa, Digital Africa Ventures, E4E Africa and Jozi Angels.
The platform claims that e-commerce merchants can save between 50% and 80% on international shipping costs, and the funding will fuel expansion in its key market South Africa, as well as launches in other key African countries. He said that he would lay the foundation for the Emerging markets.
CEO Matthew Davey cum COO craig lowman Mr Davey founded the company in 2022 after seeking a solution to the challenges he faced as managing director of a Dutch company importing South African engineering materials into Europe. In his interview with TechCrunch, Davey said the process of moving these materials is cumbersome and expensive, and his experience shows that transportation costs are widespread, especially for small and medium-sized businesses in emerging markets like South Africa. I’ve come to recognize the problem.
Current challenges in cross-border transportation are costing African businesses an estimated $50 billion a year in missed opportunities. The founders of TUNL identified a recurring problem among small and medium-sized traders in South Africa during the pandemic. That meant that shipping costs could exceed the value of the item. This also applies to high-quality goods such as textiles, clothing, footwear, camera accessories, and specialty components, despite the presence of major courier services such as DHL, UPS, and FedEx.
Typically, Cape Town sellers offer only one shipping option, such as DHL, to customers looking to purchase goods abroad. For example, a backpack might cost $60, and shipping from South Africa to the US could be about the same, $50-60, which could negatively impact your conversion rate. What TUNL has done is partner with delivery services like UPS and FedEx to ensure reasonable rates and subsidize shipping costs for small and medium-sized businesses by 50% to 75%.
“Our pricing is fully transparent and democratized. We want every business, large or small, to be able to transform their international sales by reducing shipping costs as much as possible. We want to make sure they have an equal opportunity to do the same,” Lowman said in a statement.
On the TUNL platform, sellers offer a variety of shipping options to their customers at checkout. This includes an “economy” option that incorporates shipping costs into the product price, allowing free shipping via TUNL’s courier service and slightly longer delivery times (approximately 10-14 days). Reduce cart abandonment at checkout. Alternatively, customers can choose expedited shipping options (within a week) via FedEx or UPS for a more reasonable price, such as $10 for the same backpack, allowing for more flexibility and potentially higher exchange rates. (The exact price may vary depending on destination and weight, but Davey says this is a consistent approximate number).
“It’s all about helping sellers succeed,” said the CEO. “Because if there’s only one expensive shipping option at checkout and the customer has two choices, they’re not going to buy it. “They can decide to abandon their cart or pay up.” “But when you introduce two shipping options, especially a free shipping option, human psychology forces the customer to choose one of the two, rather than abandoning the cart. .”
Primarily, South African e-commerce merchants using TUNL tend to ship most of their goods to the US, UK, Europe and Australia. Two-thirds of the shipments end up in the United States, Davey said. TUNL, which competes with Ivorian startups and platforms such as DHL partner ANKA, has grown 35% month-on-month since its launch and now has more than 700 merchants in its “delivery club.” TUNL’s merchants shipped more than 8,000 international parcels in 2023, representing R19.5 million worth of exports from South Africa, the company said in a statement.
The two-year-old e-commerce platform makes money by taking a margin from orders placed on its platform. The products we handle are wide-ranging, including backpacks, fashion shoes, arts and crafts, books, nanofiber materials, high-performance springs, various furniture, musical instruments, cosmetics, and other preserved foods. South Africa is known for its wine industry, with exports reaching 368.5 million liters last year. And although the transport of wine (alcohol) is not yet included in TUNL’s export items due to existing restrictions, Davey said the startup is now one of South Africa’s largest wine subscription businesses and its business He said he is in discussions about the possibility of participating. .
“We are getting a message from our merchants that we have transformed their business. They are adding new employees and growing because of us. So if our merchants are only serving the South African market, “It’s a win-win for the ecosystem to make people feel like they can look at the world as a market, rather than the only market they can serve,” he said. “We help merchants grow internationally just as we help them succeed, because the overseas consumer market is much larger than the domestic market for these types of products. ”
Davey said TUNL, which makes about $60,000 a month, will now focus on using the seed funding to improve sales and the onboarding process for new franchisees. In particular, the onboarding experience has been streamlined, relying primarily on customer support assistance and taking a more self-service approach.
Source: techcrunch.com
