Africa’s informal retailers supply most of the continent’s population with a broad range of consumer goods and generate over $1 trillion in sales annually. However, troubles with outward inefficiencies and inward challenges have led to the prominence of B2B e-commerce startups across the region, which provide various tech-enabled solutions to address access to products and capital.
One of the players TechCrunch has featured in this space within the past year is Omnibiz, a Lagos-based B2B e-commerce and retail platform that connects fast-moving consumer goods (FMCGs) manufacturers to retailers by digitizing the supply chain stakeholders. Deepanker Rustagi founded the company in 2019 after years of running the now-defunct VConnect.
Omnibiz operates an asset-light retail distribution model. When a retailer makes orders on the Omnibiz platform, the goods are requested from partner distributors (traditionally known to help with warehousing and transportation) who store goods on behalf of manufacturers. With Omnibiz, these distributors can focus solely on warehousing and pass on the responsibility of transporting goods to third-party logistics providers, who distribute orders to the retailers within 24 hours.
Last August, the startup raised $3 million to expand into new markets within the country. The platform, which offers a mobile app, a WhatsApp channel, and a phone number that retailers can use to stock their shops, has since expanded its footprints into 12 cities across Nigeria while completing its first Pan-African move into Ghana.
“We have expanded in terms of the number of retailers,” Rustagi told TechCrunch about the company’s growth since its seed raise. “We’ve expanded in cities, geographically, and we have improved the overall system; the retention of the retailer, even with growing competition, has been phenomenal. And I think that’s what equips us for the next race.”
Different performance metrics drive B2B e-commerce platforms across the region — from gross merchandise volume (GMV) and the number of retailers to offerings and SKUs — as they try to set themselves apart. In Omnibiz’s case, it is optimizing for retailer loyalty, a perplexing feature in the B2B e-commerce space, but one Rustagi thinks his company has hacked.
Retailers in the FMCG space tend to be price sensitive. However, having the best prices as a B2B e-commerce platform doesn’t guarantee that these retailers will stay loyal. The statement holds more true now that FMCG and food prices in Nigeria have fluctuated immensely over the past few months. So, in addition to having competitive pricing, platforms like Omnibiz are pitching convenience as they partner with distributors to help retailers get their products — be it the fastest-moving SKUs or slow-moving ones that act as substitutes — in one place whenever they need them.
“If a retailer has to buy groceries for the week or month, and one of the products is cheaper on a platform, they wouldn’t want to increase their workload of buying from multiple places, procuring and delivery, said Rustagi. “They want all the prominent milk brands, for instance, [to] always be available. A retailer that rests assured that everything he buys is available can ignore a little bit here and there on the pricing. That’s, I think, what we feel about how to build retailer loyalty.”
According to Rustagi, Omnibiz has strengthened loyalty among its retailers by assisting in other areas, including showing an interest in their long-term growth, providing working capital, and managing their stores and customers who come into them.
The platform’s bookkeeping solution — the MyStore app, which compares to the likes of Kippa, Pastel and OZÉ and allows retailers to manage their customers and inventory and access BNPL services — is behind this strategy. Rustagi argues that retailers find it challenging to manage bookkeeping solutions in Africa because the platforms are often not integrated with their procurement. As such, the amount of work required in bookkeeping is cumbersome for independent retailers unless they benefit from doing so; consequently, that’s where the MyStore app comes in, he said.
“We’ve integrated end to end for retailers. So there is no SKU creation, no pricing or price update, and no buying price and selling price. Everything comes based on the trend and enables retailers to manage their inventory and customers efficiently.”
The MyStore app, in addition to the primary Omnibiz Retail app, lets the company employ a holistic strategy to become the primary B2B operating system for retailers, enabling them with last-mile delivery, procurement, working capital, inventory management and operational tools for tracking sales, cost, prices and profit.
Omnibiz introduced the MyStore app last July to cater to retailers who are “loyal” to the platform, Rustagi noted on the call. There are over 3,000 of them. It’s relatively small compared to medium to large players in sub-Saharan Africa, such as Marketforce, TradeDepot and Wasoko, who report various multiples of that number. However, there are some nuances to how Omnibiz measures traction. According to Rustagi, these 3,000 retailers place orders on its platform daily (active daily merchants), whereas other players might provide overhead numbers of registered merchants. The chief executive provided additional context:
“In this business, you can’t choose a very high cash burn mechanism and still pursue a strong path to profitability. We are concerned about having the right volumes to make us grow into a stable, long-term and profitable business,” Rustagi said. “This has pushed us to focus more on retailers with the capacity and capability to grow but cannot do so because of challenges in their ecosystem. So we pick our retailers rather than working with every retailer in the industry. I think that’s how we want to create our impact.”
Omnibiz’s annual GMV of $130 million comes from these repeat retail customers. The company expects to increase the number of retailers on its platform to 10,000 next year. It also projects a 4x revenue increase for these retailers who connect with over 200 brands delivered by a network of more than 70 logistics partners on Omnibiz’s platform.
Its new round of funding will be pivotal to accomplishing these objectives, Rustagi said. Today, the B2B e-commerce company is announcing that it has closed a $15 million pre-Series A round ($5 million equity and $10 million debt) led by Timon Capital. Other VC firms such as Ventures Platform, Lofty Inc, Chapel Hill Denham, Chandaria and Musha Ventures also participated. Some of these investors took part in the company’s seed round.
Omnibiz said it will use the funding to double down on winning the loyalty of retail customers and driving their retention. The company also plans to begin its regional expansion this month into cities it cited during its seed raise last year: Abidjan, Takoradi, Kumasi and Accra.
Nikos Katsaounis, a partner at emerging markets VC Timon Capital, said his firm invested in Omnibiz because it believes the company is solving a much-needed problem. “The FMCG supply chain is fragmented, inefficient, and opaque. Omnibiz tackles all of these problems and addresses them with an efficient software layer that provides much-needed data on this otherwise obscure market and supply chain. Deepankar Rustagi is an excellent operating CEO.”