Nigerian B2B e-commerce startup TradeDepot is conducting pilots in two cities outside of the country as it works to streamline Africa’s fragmented informal retail sector.
Founded in 2016, TradeDepot is an end-to-end distribution platform that aims to connect the world’s top consumer goods companies directly to African retailers. With a network of over 40,000 micro retailers across Nigeria, the startup plans to build the largest retail distribution network in Africa.
The startup works with global distributors and manufacturers like Nestlé, Unilever, GB Foods and Danone to make household supplies more accessible and affordable for the informal urban retail networks it operates in.
Disrupt Africa reported earlier this month TradeDepot had raised a US$10 million pre-Series B funding round to help it expand, and chief executive officer (CEO) Onyekachi Izukanne was a guest on the latest edition of Disrupt Podcast, which was released last weekend.
He said the funds would be used to drive the startup’s expansion into more Nigerian cities, which involves building out a retailer network and then ensuring inventory, as well as putting logistics in place. TradeDepot is also starting to build a pan-African presence.
“We are running pilots in a couple of cities outside Nigeria, and we will also be doubling down on our presence, to evolve from pilot stage to more extensive operations,” Izukanne said.
He declined to reveal where exactly these pilot sites are, but they are in separate corners of the continent, and speak to TradeDepot’s wider plans to become a dominant player in a less fragmented African retail ecosystem.
“In five years from now the vision for us would be active across several key markets across the continent, and in addition to that be the route to market of choice for key FMCG manufacturers,” said Izukanne.
“There are so many things involved in making this happen, which include consistently bringing the right type of value to the customer base, creating additional value added items like the financial services we are looking at, and so on and so forth.”
He said TradeDepot would require additional rounds of financing to reach its goals, but that would all become clearer as the startup grows.
“The general picture is one in which five years from now informal retail on the continent will become less of a fragmented blackhole for the typical supplier and become something that is easier to access by plugging into one or two key dominant platforms,” he said.
The company sees huge opportunities in tackling the predominantly offline informal market across Africa.
“In so far as informal retail goes, the opportunity is massive. But as far as tech goes, it is probably not what you would call the most sexy space, for various reasons. There are fragmented supply chains, and these are people you can’t easily reach through social media. But the market is huge, and we believe that successfully extending the power of e-commerce to this space solves real and urgent problems and ultimately benefits all persons involved,” said Izukanne.
Building out a network of 40,000 Nigerian micro-retailers takes some doing, and Izukanne had some advice to startups looking to achieve similar scale.
“It is important for growth to be sustainable. It is important to not just focus on how you reach these stores very quickly, but how you reach them with a value proposition that makes them click with you. Loyalty is a very scarce commodity in this segment,” he said.
Securing the right partnerships is key, as are “boots on the ground” to educate, demonstrate value, and onboard. On the other side of the coin, working with brands like Nestlé and Unilever comes with its own set of challenges, as these companies have experience over decades and decades of what works and what does not work, meaning you cannot just “waltz in” with an idea.
“There is ample time required in working together with these parties to understand what the pain points are and build out an offering that adds real value,” Izukanne said.