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One of the most common economic actors that form part of the fabric of low income communities in South Africa is the “spaza shop” – a neighbourhood micro-retailer providing basic fast-moving consumer products (FMCGs). Often informal, these convenience stores range from hole-in-the-wall outlets selling bread and single-unit cigarettes; to walk-in shops with a couple of alleys stacked up with essentials like cooking oil, mealie meal (corn flour), sugar, milk, rice, nappies, soap and other non-perishables.

Since many if not most of these businesses are informal, there is no official data on their numbers, but conservative estimates put the number at over 100,000 around the country, providing rare jobs and livelihoods to hundreds of thousands of people.

Large wholesalers chains operating in South Africa, such as Massmart (owned by US-based Walmart) as well as smaller family-owned independent wholesalers, often located on the outskirts of townships, sell goods in bulk to spaza shops. Very little support is available to spaza owners to help them compare prices and optimise their margins. And at the other end of the value chain, FMCG companies have limited visibility on how their products are sold to and used by end customers, which makes it difficult for them to adapt their goods to the needs of South Africa’s large untapped low-income market. 

Shopit, a social enterprise founded in 2011 in Cape Town, uses technology to improve the distribution of goods and services to the spazas and provide them with competitive price information. They developed and manage an app that enables informal neighbourhood stores to order all their stock at the lowest possible price using their mobile phones, and to get it delivered to their store. They claim the model can save traders between 5 and 10% on the cost of their stock, and assist them to reduce out-of-stock occurrences. They built a community of over 6,000 informal traders in South Africa, mainly around Cape Town.

Shopit also recently developed turn-key white-label online stores for independent retailers and wholesalers operating in low-income communities, giving them access to state-of-the-art e-commerce and digital marketing solutions without any initial investment, or the need to hire new skills. They currently have 5 supermarkets using this solution. They use the data collected and their solutions to assist brands to grow their sales in informal markets and to improve the distribution of social innovations (like solar lights to replace paraffin for example).