Angus LePine Williams, Head of Operations at Shiprazor, names seven profit leaks and what the more disciplined e-commerce operators do differently.
South Africa’s e-commerce sector is booming. The market is on track to surpass R130 billion in turnover this year. Local online sales are growing at roughly 20%, and the sector handles over 100 million shipments annually. According to World Wide Worx, online shopping now accounts for 8% to 10% of total national retail - expanding at nearly 10 times the rate of traditional brick-and-mortar stores. But while revenue is rising, profit margins are shrinking.
When profits come under pressure, most merchants reach for the same playbook. They spend more on ads, push harder on sales, or negotiate lower product costs, rarely looking in the right place. The real profit drain doesn’t happen in marketing. It happens in the background - in fulfilment and last-mile delivery. Margin loss is a death by a thousand cuts, from small, hidden inefficiencies spread across delivery networks, fuel surcharges, poor courier choices, and unexamined invoices.
If you want to protect your margins, you need to stop these seven main profit leaks.
1. Unchecked last-mile costs
Globally, last-mile delivery accounts for up to 53% of total logistics costs, and in South Africa, as customer expectations around free or discounted shipping shoot up, unmanaged delivery fees quickly erode profit per order. Smart merchants constantly benchmark courier rates and avoid relying on a single provider.
By testing multiple options based on price, location and delivery requirements, you can protect margins without sacrificing speed and reliability. Or choose a platform that offers multiple courier partners.
2. Unpredictable fuel surcharges
Fuel is one of the largest cost variables in local transport. Couriers adjust their fuel levies monthly, making shipping expenses unpredictable. If you only look at your base shipping rates without tracking fluctuating landed costs, your margins will take a hit.
Shipping platforms that provide transparent, up-to-date rates and factor fuel surcharges into the total costs give you a clearer picture of actual spending. This can help you spot the most cost-effective options.
3. Poor courier allocation
No single courier performs equally across the entire country. A provider with great coverage and pricing in Cape Town might deliver poor service or higher rates in Durban or Johannesburg. Assigning orders based on rigid rules leads to higher costs and slower delivery times.
Solutions to this issue do exist, and a good place to start is by matching the courier you’re going with to your specific delivery zone based on real-time cost and success rates.
Shipping solutions can enable your business to connect with multiple courier partners. These platforms support teams in dynamically selecting the best carrier for each delivery area. This is based on current rates, coverage, and delivery performance data. The right partnership should lead to lower shipping costs while improving delivery reliability across provinces.
4. The cost of failed deliveries
Every failed delivery attempt hits your bottom line. Every return-to-origin attempt results in extra fuel, customer support time, and re-routing. Simple fixes like automated address validation and proactive delivery tracking notifications can significantly reduce these unnecessary attempts, keeping customers informed at every step.
5. Reverse logistics escalation
Returns are a double penalty. Processing a return creates a second fulfilment journey, with extra transport costs, inventory hold-ups, and double handling. Track which products and locations generate the most returns. Understanding your return hotspots helps you spot delivery exceptions early and prevent items from heading back unnecessarily.
6. Unaudited billing discrepancies
Small invoice errors quickly multiply when you’re moving thousands of monthly dispatches. Volumetric weight adjustments, incorrect service charges, and system mismatches are just some of the typical suspects. Without regular invoice audits and automated reconciliation, you are likely overpaying. The right tools match courier invoices against actual shipment details. This assists in identifying billing discrepancies and overcharges before they accumulate across thousands of orders.
7. Operating in the dark
You cannot fix what you do not measure. Most e-commerce teams closely track sales, web traffic, and conversion rates, but few have clear visibility over their true fulfilment cost per order or individual courier performance.
Real-time logistics dashboards are the only way to catch operational leaks early. They provide visibility and actionable insights from one place, giving you the data you need to make smarter decisions.
Moving beyond cheaper rates
Protecting your margins requires moving towards intelligent, data-driven fulfilment.
By adopting multi-courier management strategies, dynamically routing packages based on regional performance, and automated invoice auditing, South African merchants can safeguard their bottom line. In a competitive market, sustainable growth belongs to the merchants who manage their operational details as tightly as their sales funnels. The profit leaks are there. You just need to find them.
