South African parcel shipping platform, TUNL, has successfully secured $1 million in pre-seed funding from notable investors, including Founders Factory Africa, Digital Africa Ventures, E4E Africa, and Jozi Angels. This funding injection will propel TUNL’s expansion within its primary market, South Africa, while also laying the foundation for its entry into other key African and emerging markets.
Founded in 2022 by CEO Matthew Davey and COO Craig Lowman, TUNL addresses the challenge of exorbitant international shipping costs faced by e-commerce merchants. Davey, the former managing director of a Dutch company importing South African engineering materials into Europe, identified the cumbersome and expensive nature of the shipping process. This experience fueled the realization of the widespread issue of high shipping costs, particularly impacting smaller businesses in emerging markets like South Africa.
The cross-border shipping challenges in Africa result in an estimated annual loss of $50 billion for businesses. TUNL’s founders observed a recurring issue during the pandemic, where shipping costs sometimes exceeded the value of products, even for high-quality items like textiles, clothing, footwear, camera accessories, and specialized components. This was despite the presence of major courier services like DHL, UPS, and FedEx.
TUNL’s approach to address this issue involves forming partnerships with courier services such as UPS and FedEx, securing favorable rates, and subsidizing shipping costs for small- and medium-sized enterprises (SMEs) by 50% to 75%. This transparent and democratized pricing model aims to provide equal opportunities for businesses of all sizes to reduce the cost of shipping, facilitating overseas sales.
On the TUNL platform, merchants can offer customers various shipping options during checkout. This includes an “economy” option with shipping costs incorporated into the product price, enabling free shipping via TUNL’s courier service with a slightly longer delivery time (around 10 to 14 days). Alternatively, customers can opt for faster shipping options (within a week) with FedEx or UPS at a reasonable cost, enhancing flexibility and potentially improving conversion rates.
Since its launch, TUNL has experienced significant growth, with a 35% month-on-month increase. The platform currently boasts over 700 merchants as part of its “shipping club,” and merchants have shipped over 8,000 international parcels in 2023, representing exports from South Africa worth R19.5 million.
While TUNL primarily serves e-commerce merchants in South Africa sending products to the U.S., the U.K., Europe, and Australia, CEO Matthew Davey mentioned ongoing discussions with one of the largest wine subscription businesses in South Africa to potentially include wine (alcohol) shipping in TUNL’s offerings.
TUNL generates revenue by taking margins on orders placed on its platform, handling a diverse range of products, including backpacks, fashion footwear, arts and crafts, books, nanofiber materials, high-performance springs, various types of furniture, musical instruments, and nonperishable products like cosmetics.
With monthly revenue approximately at $60,000, TUNL plans to utilize the seed funding to enhance sales and the onboarding process for new merchants. The focus is on improving the overall user experience by streamlining the onboarding process, moving towards a more self-service approach.
