It can be a major inconvenience when a favorite product is out of stock at a store, especially when it happens on a regular basis. For small retail store owners in Africa’s informal and fragmented retail markets, however, running out of product stock can be a huge blow to their bottom line.
It’s a challenge Daniel Yu took on six years ago when he founded business-to-business (B2B) marketplace Wasoko, hoping to disrupt a billion-dollar industry with huge growth potential through the continent.
“Anything that can be done to improve efficiency and ultimately improve the accessibility and availability of these essential goods for one and a half billion people is going to be a huge undertaking,” said Yu, Global CEO. and founder of Africa-focused B2B e-commerce. startup, PYMNTS said in an interview.
Since its launch in 2016, the business has grown into a thriving pan-African marketplace with over 50,000 informal retailers in its network across East and West Africa – Kenya, Tanzania, Rwanda, Uganda, Côte d’Ivoire. ‘Ivory and Senegal – with increasing incomes over the years. 500% in the last 12 months and more than 2.5 million orders completed during this period.
Through Wasoko’s platform, informal retailers can order products via SMS or mobile app, which are then automatically forwarded to a warehouse or distribution center for free same-day delivery to their store, often less. three hours.
When it comes to facilitating cross-border payments, especially in emerging markets like Africa with relatively weak payment infrastructure, this can be a challenge for businesses. However, Yu said the prevalence of cash transactions in the markets the company operates in has worked in his favor.
“We actually still collect mostly cash on delivery, and the majority of that is still cash,” he explained. “[That] is a reflection of the fact that informal retailers operating in local communities still largely serve their consumers in cash.
Since its launch in 2016, the business has exploded, which Yu attributes to an industry worth more than $600 billion a year. “This is the amount of consumer goods that are being bought and sold in informal retail stores across the African continent right now,” he added.
With those numbers and growth potential, investor interest has skyrocketed, allowing the B2B company to close a $125 million Series B funding round this month, which claimed to be the biggest ever. of non-FinTech financing and venture capital raised in Africa.
Read more: B2B e-commerce startup Sokowatch announces name change to Wasoko after $125m funding round
Partly as a result of Wasoko’s rapid growth, the company encountered issues with sourcing and sourcing products from manufacturers.
“And that means we’re going to place a purchase order for 10,000 boxes of soap and we’ll only receive 6,000, which is very frustrating because it will lead to stock-outs for our customers – the products won’t be available to them. restocking,” Yu explained.
This can lead to a poor experience for customers, so improving supply chains to help build capacity at supplier level has become essential – something an in-house brand could potentially address.
“Private label is something we’re actively exploring right now,” Yu said. “I think the opportunities to integrate more vertically into our value chain is exactly what’s going to unlock some of those constraints.”
One of the areas where the company has done better is its BNPP (buy now, pay later) offering, which currently generates more than 10% of Wasoko’s total sales volume in its markets.
According to Yu, the BNPL product is just the beginning, providing an opportunity for a wide range of services that Wasoko can offer “thanks to unique relationships, data and infrastructure that we have built to serve the African mass market. which previously had no directly digitized service”. platforms offering such services.
To better address the working capital constraints faced by local retailers, Wasoko is exploring other financial offerings that may be available to merchants, including direct loans and insurance products in the near future.
“I think we have the opportunity to be, in a sense, a market for financial services where existing institutions, banks [and] insurance companies would be able to access our network of customers, and we can help facilitate access to their products in a way that they never had channels to distribute them before,” said he noted.
The company also plans to replicate the success of the model in six other cities by the end of 2022, including in Nigeria and other Southern African markets.
The company is also looking to expand its product offering and is considering other services that could be offered to merchants and even other players in the value chain.
“Both strategies of innovation and internal research and development, as well as potential external investments and even acquisitions, can help us achieve growth in these two categories,” Yu said.
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