Presented by Bob Group

How we are building a billion-dollar technology-driven South African company

Written by Andy Higgins

Let’s face it, the likelihood of you reading this would have been significantly lower if the article title were more straightforward, such as “Bob Group 2023 year in review”.

We still have some way to go but Bob Group is on a quest to become one of the few African tech companies to date that has reached the sought-after “unicorn” status.

Easy to say but much harder to do. To justify a valuation of a billion dollars in purely financial terms, one would need to create enough sustainable value to ultimately generate a profit of at least $100 million per year and that is applying a generous earnings multiple of 10.

In other words, a monthly profit of $8.3 million or about R160 million at current exchange rates.

To tackle this challenge, Bob Group was formed by the merger of the online marketplace bidorbuy (rebranded to Bob Shop) and uAfrica (rebranded to Bob Go). Fulfilling the promise of “everything ecommerce”, the company’s portfolio includes online payments solutions (Bob Pay), logistics services spanning a nationwide locker and counter network (Bob Box), and Software as a Service (SaaS) platform (Ship Logic) providing technology as a service required to run a courier company.

Bob Shop

Bob Cats at our Bryanston office

Online marketplaces require significant investment and are notoriously difficult to reach scale and become sustainable.

In South Africa at this juncture, one would be remiss not to mention at least two “elephants in the room” namely Naspers-owned Takealot and the imminent launch of Amazon’s South African online marketplace.

How does Bob Shop, launched as bidorbuy more than a decade before Takealot, compete with these behemoths who have seemingly unlimited resources at their disposal?

  • Bob Shop does not sell anything itself like Takealot and Amazon do. This deliberate choice is driven by the avoidance of competition with its own sellers and the desire to prevent potential conflicts of interest.
  • Bob Shop exclusively runs a more efficient, decentralised logistics model allowing sellers to keep their own stock, and maintaining more control with savings on their overall logistics and storage costs.
  • Bob Shop is seller-focused providing a transparent and fair place to trade with a lower barrier to entry.
  • Bob Shop offers more options to sell through different selling formats like auctions covering a broader range of product categories such as antiques, collectables and preloved items.
  • Bob Shop is local and more agile with a strong focus on tech. Having a startup culture, we can adapt quickly to local conditions and changes in the market.
  • The cost to sell on Bob Shop is less, which should ultimately result in lower prices for buyers.

Amazon vs Takealot vs Bob Shop fees in South Africa

Amazon Takealot Bob Shop
Base fee R400 per month
(R1 per month until Dec 2024)
R400 per month R0 per month
Fulfilment fees Starting from R27 per unit Starting from R20 per unit Starting from R26.09 per order*
Success Fees Minimum 6%
Maximum 15%
Minimum 4%
Maximum 18%
Minimum 5.75%
Maximum 8.75%
*Fulfilment fees on Bob Shop are charged per order whereas Amazon and Takealot charge per unit

Table 1: Comparison of selling costs: Amazon vs Takealot vs Bob Shop

Bob Shop underwent many changes since the merger while also facing other challenges such as being investigated by the competition commission as well as push-back from existing sellers that felt some changes were not in their best interests. Some of the changes implemented include:

  • Rebuilding the Bob Shop mobile app using more modern cross-platform technology.
  • Bob Go was integrated into Bob Shop to enable standardised R30 shipping for buyers.
  • A change to only charge seller’s success fees on order payment with the removal of final order value fees resulting in a direct saving for sellers.
  • A change to link seller payouts with the shipment status of orders to provide greater protection for buyers.
  • Transitioning of all payments to use the new Bob Pay with standardised payment methods for all sellers (still in progress).
  • Rebuild of Bob Sync directly on Bob Shop including AI tools to manage product categorisation with direct integrations into Shopify, Woocommerce and Google Sheets.
  • Many UX improvements such as for search and the registration process (ongoing).

Notwithstanding all these changes and even though one can normally expect a lag for the effects to be realised, Bob Shop saw a 26% growth in Gross Merchandise Sales and a 43% increase in paid orders during November 2023 compared to the previous year.

With South Africa still lagging even its developing world counterparts in ecommerce adoption, there appears to be a new impetus for growth, which Bob Shop is well positioned to take advantage of moving into 2024.

The marketplace however only forms one part of the overall Bob Group offering with the other services playing an important role in delivering on the promise of “everything ecommerce” by providing a full suite of services to help merchants run their businesses.

Bob Pay

Why is it that everything related to payments seems to carry a hefty premium?

Sure, fintech is innovative and rightfully requires a high level of regulation, compliance and controls but why should a percentage fee be charged for something that technically requires the same to process whether it is a R10 or R10,000 transaction?

There are changes afoot in payments. It may be slow and take some time to get there but being a newer kid on the block, Bob Pay is well-positioned to disrupt this space.

One of these areas is PayShap and Bob Pay is excited to partner with Investec with the intention of being one of the first payment providers to support a merchant solution for PayShap payments.

Bob Pay in partnership with Nedbank is also aiming to provide better value to merchants when receiving card payments.

With integrations into Shopify and WooCommerce, other payment methods offered by Bob Pay include Scan to Pay in partnership with Ukheshe, an in-house built Instant EFT payment method and Capitec Pay.

Bop Pay also holds a patent for an innovative alternative to processing EFT payments in near real-time by verifying the proof of payment from the source bank.

This is an interesting area for Bob Group as it looks forward to disrupting payments by offering innovative and more cost-effective solutions to merchants as well as more informal traders.

To spearhead this initiative, Bob Pay is looking for a business and operations manager to head up this part of the business. If you think you could be suitable for the role, please send your CV to [email protected].

Bob Go

Bob Cats at our Pretoria office

Bob Go has become the de facto service for ecommerce merchants to manage the fulfilment of their orders.

With integrations into ecommerce platforms such as Shopify, WooCommerce, Magento and Ecwid as well as courier companies including The Courier Guy, RAM, Skynet, Internet Express, Fastway and WumDrop, the platform makes it easy for merchants to manage their orders while getting competitive pricing and keeping their buyers up-to-date with automated tracking and other productivity tools.

Facilitating over 300,000 shipments per month, there is a good chance you would have at some point received a parcel delivered with the Bob Go logo discreetly displayed on the bottom right of the waybill indicating that the parcel was fulfilled using Bob Go.

Bob Go has been running reliably on Bob Group’s modern technology infrastructure for over a year now. Hosting on AWS cloud infrastructure enables services to seamlessly scale as demand increases for example during the peak Black Friday period.

Other technology used as part of the Bob Group tech stack includes serverless lambdas programmed in Golang, Aurora PostgreSQL for database management, React Native and React with Tailwind CSS for frontend development.

Bob Box

This is a very exciting project where Bob Group stepped out of its comfort zone, moving away from building only software to taking on a hardware project.

Bob Box involves building a nationwide pick-up point network of lockers and counters with an initial focus on smart parcel lockers.

The lockers are locally designed and manufactured with an emphasis on customization to accommodate the unique requirements of operating in South Africa.

This involved developing a battery-powered solution that does not rely on external power due to challenges presented by load shedding, using the latest IoT technology on Vodacom’s network for robust communication and of course minimising any inherent security risks.

Why should South Africa, a net exporter of steel, export steel to China only to have it shipped back after it has been bent and molded into the desired shape?

By manufacturing locally, not only does it further enhance the environmentally friendly nature of the model, but Bob Box is also able to produce these lockers at a significantly lower cost compared to sourcing them internationally.

Bob Box currently has 12 locker locations in Gauteng with a target to reach a minimum of 150 locker locations nationwide by the end of 2024 offering South Africans a safe, convenient and more cost-effective alternative for deliveries.

For ecommerce to thrive and truly become accessible to all South Africans, there needs to be a viable delivery option for those living in more informal areas who may not have a structured place of work nor a well-defined home address.

Currently, a “to-door” courier service typically charges a premium for such deliveries, one of the current challenges Bob Box hopes to address.

Ship Logic

Bob Group has built, dare we say it, the best software to run a courier company in South Africa that no doubt would rival any similar solution the world over.

In contrast to traditional platforms that historically relied on suburb and postal code-based addressing, Ship Logic has been built from the ground up over the past six years.

It employs a groundbreaking approach, converting all addresses to latitude and longitude coordinates linked to various maps defined by geofenced areas.

This innovation facilitates precise control and automation of the courier’s internal processes.

One of the stand-out features of Ship Logic is the “API-first” approach taken on all Bob Group projects making the platform extensible and allowing couriers to add their own unique functionality on top of an existing excellent foundation.

While the platform already offers best-of-class functionality, further enhancements planned for 2024 include:

  • Driver route optimisation.
  • Interactive Delivery Management (IDM) enhancements:
    • Bi-directional communication between drivers and recipients.
    • Interactive live tracking maps when the driver is “on the way”.
    • Rescheduling options for recipients to reduce failed delivery attempts.

One of the benefits couriers using Ship Logic get is seamless integration into the Bob Box network without having to make the hefty initial capital investment and carry the operational cost of building and maintaining their own physical infrastructure for such a network.

Conclusion

You might say becoming a billion-dollar company is quite an ambitious goal and you would be right in saying so.

Unicorns are indeed very rare, especially in Africa but what is also very rare is the amazing 114 Bob Group staff members, or “Bobcats” that make Bob Group what it is today.

Surely luck has also played a role in having such an amazing company culture with highly performant teams that are able to execute on our vision.

It is certainly not something that many companies have the privilege of enjoying.

Furthermore, Bob Group is profitable. This means as it stands there is an unlimited financial runway to achieve the goal of unicorn status.

The company also has the added benefit of being backed by private venture funding with ongoing access to additional financing options, if needed.

While it is still early in the evolution of Bob Group, every day we take a step closer to achieving our big lofty goals.

We are a tech-driven company empowered by our amazing people with ambitious plans to make a big impact in the South African ecommerce space.

We are just getting started. Now we execute … keeping in mind:

One of Bob Group’s favourite internal quotes: “Simplicity is the ultimate sophistication” – Leonardo Da Vinci.

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How we are building a billion-dollar technology-driven South African company