Working in ecommerce in South Africa, one of the first comments Lars Veul heard was “whatever you do, never use the Post Office”.
This stuck with him, and it was the driving force behind his decision to start smart logistics company Pargo with his business partner Derk Hoekert.
Veul said the more they reflected on the Post Office’s poor service levels, the more they realized the depth of the challenge in South Africa.
“In South Africa, ecommerce companies are deterred from using the national Post Offices due to poor digital integrations, frequent strikes and service shutdowns,” he said.
The absence of a reliable Post Office was a big a hindrance to people getting access to goods, especially in outlying towns, rural areas, and townships.
While there was demand for ecommerce services across the country, there was no way to get goods to people living in rural areas.
Veul and Hoekert decided to change this by creating a network of pickup points across the country for ecommerce deliveries in 2015 – Pargo was born.
Starting and growing Pargo
Veul and Hoekert self-funded Pargo to get it off the ground and spent the first few months seeing clients, pickup point partners, and retailers.
At the time, Pargo had no employees other than the founders and they initially worked from home and in coffee shops.
The business started to gain traction – they made their first R1 million in just 3 months – and they launched a small seed investment round.
They also employed their first employee at this time to help with operations, call centre, and admin tasks.
Their growth continued and a Series A funding round followed where SAAD Investment Holdings and a few small independent investors joined the company as shareholders.
Pargo’s biggest challenge and strong growth
Veul said Pargo’s major challenge was in finding the first client to send goods through their network or pickup point retail partner.
It was a classic chicken-egg dilemma: To convince potential clients to work with them they needed a network of pickup points, but to get a network of pickup points they needed to convince retail stores that they had enough clients lined up that would work with them.
“We eventually reached out to Freshstop at Caltex to pilot in 14 stores around the Western Cape as alternative pickup locations for our first few ecommerce clients, including One Day Only,” he said.
“After 3 weeks, we were given the green light to expand nationally. We managed to open a total of 500 pickup points in our first year through more retail partnerships.”
This growth continued and Pargo now has over 2,000 pickup points across the country, which include Clicks, Lewis, The Fochini Group, Cape Union Mart and Spar.
“This expansion has enabled us to have a pickup point in almost every town and suburb in South Africa,” Veul said.
Today Pargo offers a true alternative to the SA Post Office and is an enabler for ecommerce delivery across South Africa.
Lars Veul’s tech and business choices
Pargo founder Lars Veul shared his tech and business choices with MyBroadband.
What was your first ever business?
Pargo was the first business that I started and built myself together with my co-founder Derk.
What was your first job and what was your salary?
I’m from an entrepreneurial family and most of my family run their own businesses. From a young age my parents encouraged me to work and make a little extra pocket money, thus starting from around the age of 11 I started to work in my uncle’s factory doing odd jobs on Saturdays and during school holidays for a few Euro.
How did you get into the tech field?
I’ve always been interested in tech and followed the Silicon Valley stories and publications since high school. After finishing university, I joined Groupon in the Netherlands just two months after it launched.
This early exposure to the Groupon model opened my eyes to the opportunity that is inherent in finding scalable technology-based businesses and new business models.
As part of the founding team in Groupon, I helped grow the business from 10 to 500 employees with $50 million in annual sales over the next 2.5 years. Groupon at the time was an exceptional fast-growing ecommerce company and swiftly expanded to 50 countries. In 2012, I was asked to join operations in South Africa, which I happily agreed to.
Arriving in South Africa I realized that the problems facing ecommerce posed by the country were about as great as its promises and decided to start Pargo together with Derk to enable ecommerce clients in South Africa and the rest of Africa to thrive.
What laptop do you currently use?
What smartphone do you currently use?
iPhone XR (in Pargo Yellow).
What is the best gadget you have ever bought?
An electrical skate board. I caused some havoc in the centre of Amsterdam with that thing.
What is the worst gadget you have ever bought?
I grew up during a period that the music industry was disrupted every 3-5 years and needed to upgrade time over time.
I’ve had to replace all the below:
- Walkman – Cassette recorded from the radio
- Discman – CDs bought in the record shop
- Mini Disc Player – downloaded from Napster
- iPod – bought on iTunes
- iPhone – streaming through Spotify
What was your best ever investment?
I probably still have the biggest ROI on early Bitcoin investments made.
What was your worst ever investment?
A Land Rover I bought a few years after moving to South Africa that got me stuck 75% of the way to Windhoek over a very hot December holiday.
What is the best business advice you have ever received?
“Whatever you do, don’t use the Post Office!” – Some of the first words from the Groupon SA CEO after arriving in SA which eventually led to the start of the business.