Uber Eats of townships a massive hit

A South African on-demand food and goods delivery service operating in townships has amassed tens of thousands of customers in about a year, Sunday Times reports.

The service — Spaza Eats — was created by Analytics X founder Talifhani Banks, a young businessman from Makhado in Limpopo.

Banks previously worked as a pricing and brands analyst for Daymon, Grohe, Pick n Pay, and AutoZone South Africa.

His background in retail statistics and econometrics helped him spot a gap in the market for delivery services in townships, which major operators have neglected due to perceived crime risks.

Spaza Eats aims is to link up spaza shops, small-scale farmers, and township cuisine stores directly with their communities.

Since launching in July 2023, the service has amassed over 60,000 customers and onboarded 4,500 merchants.

Its delivery personnel has grown to 1,105 independent motorcycle drivers and seven full-time drivers.

Current Spaza Eats coverage areas include parts of Gauteng, Cape Town, Durban, and Limpopo, and the company plans to expand to every small town in South Africa by June 2025.

Thereafter, Spaza Eats aims to expand to other African countries — including the DRC, Kenya, Nigeria, and Rwanda.

In addition to food, the service has facilitated deliveries of products like cellphones and solar panels.

Banks also set up a business-to-business marketplace called Spaza Market to enable more seamless trading between restaurants, farmers, and retailers in the township economy.

Spaza Market has secured strategic partnerships with BP Express and the National Agricultural Marketing Council.

Banks said the platform also onboarded suppliers of major tech brands, including Apple, Huawei, Samsung, Skyworth, and Ultra Link.

Spaza Eats is available in a browser and a mobile app for Android and iOS.

At the time of publication, the platform had recorded between 10,000 and 50,000 downloads of its Android app on the Google Play Store.

Its average user rating from 42 reviews on this app store was 2.9 out of 5, while the iOS app had a higher average of 3.4 out of 5 from 25 reviews.

MyBroadband found most complaints related to the app sign-up and functionality sometimes being problematic, while several users also reported deliveries took multiple hours.

However, there were also many examples of users who were happy with the service.

Competition from Takealot and Uber

Spaza Eats is up against intensified competition from Takealot and Uber.

Takealot and the Gauteng Provincial Government launched the Takealot Township Economy Initiative in April, promising a R150 million investment into township e-commerce in Gauteng.

This includes the Mr D Mzansi Trailblazer restaurant programme, which aims to offer independent restaurants a leg up with trading benefits to boost sales on the delivery platform.

There are no sign-up fees for joining the platform, and Takealot promised regular training to help restaurateurs use the available tools.

It also provided advertising credit to the value of R1,000 for the first three months of trading on Mr D and said there would be further credits in future.

While Uber has traditionally focused on more affluent suburbs, it has also seen the potential of the township economy in South Africa.

In August 2023, the platform announced it would invest R200 million to expand its food delivery service to townships in Gauteng.

Informal economy expert GG Alcock highlighted the big hidden potential of small enterprises in townships at the BizNews Conference in Hermanus earlier this year.

Alcock gave the example of township fast food seller Mbali, who made about R80,000 in profit from selling chickens.

These types of businesses are estimated to generate around R90 billion every year, while licenced taverns that sell food and alcohol make an additional R110 billion.

Alcock explained that these businesses are seeing exponential growth due to two factors:

• Township residents who live in 1-bedroom backrooms do not want to cook food in those rooms.
• Load-shedding and other power outages makes it difficult to cook food, which drives people to fast-food alternatives.