TUNL, a South African parcel shipping platform, has recently announced securing $1 million in pre-seed funding from a group of investors including Founders Factory Africa, Digital Africa Ventures, E4E Africa, and Jozi Angels. This funding will serve as fuel for the company’s expansion in its primary market, South Africa, as well as pave the way for its launch in other key African and emerging markets.
“Our goal is to help e-commerce merchants save between 50% and 80% on international shipping costs,” TUNL’s CEO Matthew Davey shared in a recent interview with TechCrunch.
The motivation behind TUNL’s creation can be traced back to Davey’s previous role as the managing director of a Dutch company that imported engineering materials from South Africa to Europe. He quickly recognized the high costs and challenges associated with shipping these materials and saw a widespread issue for smaller businesses in emerging markets like South Africa.
The current challenges in cross-border shipping are estimated to cost African businesses upwards of $50 billion annually in missed opportunities. Sadly, this was not an isolated issue, as TUNL’s founders found in the wake of the pandemic. Small- and medium-sized South African merchants were struggling with shipping costs that often exceeded the value of their products, even for high-quality items like textiles, clothing, and specialized components. This was despite the presence of major courier services like DHL, UPS, and FedEx in the country.
For instance, merchants in Cape Town typically only had one shipping option, such as DHL, available for customers looking to purchase their products abroad. This often resulted in conversion rates being negatively impacted, as customers were unwilling to pay the high shipping costs. To combat this issue, TUNL formed partnerships with courier services like UPS and FedEx, negotiated competitive rates, and then subsidized SMEs’ shipping costs by 50% to 75%.
Our pricing is completely transparent and democratized. We want to ensure that every business, large or small, can have an equal chance to convert overseas sales by reducing the cost of shipping as much as possible, said COO Craig Lowman in a statement.
On the TUNL platform, merchants now have the ability to offer customers various shipping options during checkout. This includes an “economy” option where the shipping cost is factored into the product price, allowing for free shipping through TUNL’s partnered courier service with a slightly longer delivery time (around 10 to 14 days) to combat cart abandonment. Alternatively, customers can choose faster shipping options (within a week) with FedEx or UPS at a more reasonable cost, typically around $10 for a backpack. This enhanced flexibility has the potential to improve conversion rates and customer satisfaction.
According to CEO Davey, “If you have only one expensive shipping option at checkout, customers may choose to abandon their carts. But by introducing two shipping options, especially one that’s free, human psychology drives customers to choose one of the two instead of abandoning their cart.”
Currently, the majority of e-commerce merchants in South Africa using TUNL ship their products to the U.S., the U.K., Europe, and Australia. Two-thirds of these shipments end up in the U.S. since TUNL’s launch. The platform’s growth has been significant, with a 35% month-on-month increase and over 700 merchants now part of their “shipping club.” In 2023 alone, TUNL’s merchants have shipped over 8,000 international parcels, representing over R19.5 million in exports from South Africa.
The two-year-old e-commerce platform generates income by taking margins on the orders placed through its platform. They handle a diverse range of products, including but not limited to backpacks, fashion footwear, arts and crafts, books, nanofiber materials, high-performance springs, various types of furniture, musical instruments, and nonperishable items like cosmetics. As South Africa is also known for its wine industry (with exports reaching 368.5 million liters last year), TUNL is hoping to venture into that business as well after discussions with one of the largest wine subscription businesses in South Africa.
CEO Davey shared, “We have received messages from merchants expressing how we have transformed their business. They have been able to add new employees and grow, all thanks to our platform. It’s a win-win for the ecosystem, as we are helping businesses realize their potential in global markets.”
With a current monthly revenue of approximately $60,000, TUNL plans to use its seed funding to improve sales and the onboarding process for new merchants. They have made significant strides in streamlining the onboarding experience, shifting from a primarily customer support-based approach to a more self-service model.
