Sokowatch is Reinventing Africa Informal Retailer

By Start.Space

Sokowatch is a B2B e-commerce platform connecting African retail stores with multinational companies such as Unilever and Procter & Gamble. The start-up ’s mission is to empower the informal retail sector to join the digital economy. Launched in Nairobi in 2016, Sokowatch allows storeowners to order fast-moving consumer goods at any time through SMS or mobile app for same-day delivery. Sokowatch has already delivered over 100,000 orders to customers, and has been growing rapidly.

Sokowatch currently supplies thousands of retailers in Kenya and Tanzania with free same-day delivery of products from both multinational consumer goods companies and local manufacturers. The start-up also offers customised lines of credit to retailers, and plans to rollout additional complementary financial services in the future based on its proprietary customer data. 

These milestones have clearly demonstrate the demand for their inclusive technology, which increases the availability of goods; while at the same time reduce the time and cost of procuring products for storeowners in Africa.

The start-up has clearly captured an opportunity to streamline the existing supply chain structures for Africa’s informal retailers. The team is betting on their competitive on prices and productivity offered through their technology platform. Storeowners using Sokowatch’s platform are able to save on transport costs and minimize lost sales, which can account for up to 20% of business costs.

These stores can use Sokowatch’s app on mobile phones to buy wares directly from large suppliers, arrange for transport, and make payments online. “Ordering on SMS or Android gets you free delivery of products to your store, on average, in about two hours,” said According to Daniel Yu, Sokowatch founder and CEO.

The start-up generates revenues by earning “a margin on the goods that they are selling to shopkeepers.” The start-up has delivered 100,000 orders to customers for “a few thousands shops,” according to Yu and company data. In addition of connecting stores with suppliers, the company has recently launched a line of credit product to extend working capital loans to platform clients.

 




Connecting Informal Retailers with International Suppliers

CHALLENGES IN THE AFRICA´S INFORMAL MARKET

Although it is somehow difficult to quantify the size of the informal market in African, there is huge potential the market, and this has captured the attention of the of economists, startups and investors. According to Yu, “there are millions of informal stores across Africa’s cities selling hundreds of billions worth of consumer goods every year”. He noted a lack of reliable numbers, but mentioned that according to a 2016 KPMG studies, fast moving consumer goods spending in Nigeria reaches $41 billion annually. A portion of those goods move through the continent’s network of roadside markets, shops, and stands.

“With over 90% of retail sales across Africa happening through informal retailers, we believe that there is a huge opportunity to formalize small businesses,” says Daniel Yu, CEO and Founder of Sokowatch. It is without doubt that informal retailers are a critical part of local communities, and serve as social centres for their neighbourhoods. In fact, a significant component of Sokowatch’s success has been leveraging the insights of their team, many of who come from the neighbourhoods they serve. “Our operations manager David Marika previously worked in field marketing for P&G, and recruited all of our first drivers. Our entire team, including our software developers, is based in East Africa, which is essential to creating the most effective solutions for storeowners in the communities we serve,” says Daniel Yu, Sokowatch founder and CEO.

Given the fragmentation of the retail sector in Africa, multinational FMCG companies struggle with distribution and visibility on where their products end up. “We help manufacturers increase their sales and can tell them exactly where their goods are going, and how long they are on the shelves,” added Yu. Unilever Customer Development Director Moses Bamidele agreed, mentioned that  “Sokowatch is one of the good tools of technology that will help drive costs down significantly.”

Yu also noted the possible big data benefits to informal African retail from Sokowatch. “If you are selling into this market you have no clue who ultimately ends up with your product, even two layers down. That’s a big challenge,” he said. “With us, not only do we know who’s buying the product, we know when they are buying the product, what they’re buying it in conjunction with, and the pricing.

These achievements have certainly attracted both regional and international investors. The start-up has closed $2 million seed round led by 4DX Ventures. They are joined in this round by San Francisco-based venture capital firm, Village Global (limited partners include Jeff Bezos, Bill Gates and Diane Greene), Lynett Capital, and other Africa-focused venture funds including Golden Palm Investments and Outlierz Ventures.

With the investment, Sokowatch seeks to “expand to new markets in East Africa, as well as pilot additional value add services to the shops,” said Yu. Peter Orth, Co-Founder and Managing Partner at lead investor 4DX Ventures, will join Sokowatch’s board of directors.