Episode 22 of the BIG5D Podcast features Deepankar Rustagi, CEO of Omnibiz Africa.
Deepankar founded Lagos-based Omnibiz in 2020 to help small FMCG (fast-moving consumer goods) retailers run their businesses more efficiently.
Omnibiz has a solution for each link in the local FMCG value chain — retailers, field agents, suppliers, and drivers. Omnibiz offers agents, suppliers, and drives revenue opportunities.
The company recently raised a $3 million seed round to build out its product and pursue international expansion. The company has raised $4 million since its inception. And Deepankar believes Omnibiz will need to raise $50 million in order to achieve its vision.
As Deepankar explains, Nigeria has 1 million small retailers. Most of these generate less than $1,000 a month in gross revenue, stocking perhaps 30 to 50 SKUs. And three-quarters are women-led businesses. These businesses need a way to stock their shelves efficiently, so they are no waiting weeks for deliveries or having to close up shop to go out and find stock.
In the near term, Omnibiz hopes to offer a credit product, so the best customers can fulfill orders on credit vs cash on delivery as it is today. The company also wants to expand its software offer to include a simple CRM for its small business customers to better organize their businesses.
Omnibiz faces growing competition in Nigeria. One example is TradeDepot, a B2B eCommerce platform that distributes consumer goods to more than 40,000 Nigerian micro-retailers. The company was founded in 2016. And last year it raised a $10 million pre-Series B round, which brought its cumulative fundraising total to $13 million.
Another competitor, Nairobi-based MarketForce was founded in 2018 and recently raised a $2 million Series A round to focus on building up its RejaReja marketplace and to take its concept to the Nigerian market.
Here is the full interview with Deepankar on YouTube.
Episode 22 of the BIG5D Podcast is supported by Matchcraft, a global martech company powering local search, social, and display campaigns. Matchcraft has introduced “Powered By”, a solution that productizes its suite of APIs, giving third-party platforms access to the technology behind its flagship AdVantage platform. Visit Matchcraft.com for more.
Here are some key passages from Episode 22.
What is a major pain point that you solve for these small retailers?
“We effectively increase their productive hours. They don't have to shut down their stores {to go find stock]. Previously, they used to wait until all the SKUs or all the products on the shelves were finished. There is still a minimum order quantity, but they can now order whatever has finished. So they can order multiple times in a week rather than once in two weeks.”
We’ve seen other startups decide to own their logistics channels. You’ve chosen not to. Why?
“Getting logistics right is challenging. And this is one area where when you scale, you spend more. So someone who has 500 bikers is going to be spending more than someone who has 50. And similarly, more than someone who has five. So we said we're going to aggregate them with technology. So we onboard with these third-party logistics providers, we train their drivers as well as their fleet managers in terms of how to track, how to see the earnings, and how to start and stop the trips.”
How is your company differentiating in what is an increasingly competitive field?
“I think one of the key differences is, we started with the technology first. We are not focused on accruing assets. We are more focused on finding partners who could do it. We don't do any of the logistics or the warehousing. We get it done. So most of the other companies are doing it. Doing the warehousing or the logistics piece, or some of them doing both of them on their own. Our differentiation is that we do not get into doing it on our own. This helps us in scaling efficiently.
“The second key difference is the number of SKUs that we offer. So if you see, the long term problem that we are solving is really the retailer's problem. And we are focused on the retailer. So the number of SKUs that we offer on our platform is aimed to complete the variety that a retailer buys, so they don’t have to go anywhere else to buy.
“And lastly, I think we're going to offer a couple of other tools, other than lending, to the retailers. Like a retailer CRM, so he or she can manage their business.”
How easy was it to raise money for this round? Has the funding environment changed since you became an entrepreneur?
“Lots of capital now is available for African businesses, especially after the pandemic. Globally, there is a lot of capital available. Raising money has become substantially easier. In the African context, there is the challenge of trust. So a lot of investors who are open to investing in your company are looking at someone to make the first move. And once you have that one person who has made the first move…then they bet on the other investors. There are a lot of seed investors available who can cut you a check between $25,000 to $300,000. But there are fewer Series A investors available.”
How are you approaching international expansion?
“We're looking for partners in expanding into other geographies. We believe this business is pretty local. Even though we are technology driven. Africa is not a country, it's a continent. And countries here are pretty diverse. So going into East Africa, or going into Egypt, or South Africa, or even in Ghana and Ivory Coast, we prefer to move in with partners.
“So we are onboarding partners who understand the logistics, who understand the warehousing bit in these countries and will be willing to be our co partner in that country to drive it. So yeah, we are going to expand very soon into other West African markets that are stage one, and would want to be the leaders in the West African space prior to us moving into other markets in Africa.”
BIG5D Podcast Episode 22: Omnibiz Africa Founder and CEO Deepankar Rustagi