This archive report was first published on 29 July 2019.
July 29, 2019 - In a bid to address the challenges of informal markets in Africa, Sokowatch, a Nairobi-based startup, has developed a business-to-business e-commerce supply chain linking small-scale retailers to manufacturers such as Unilever and Procter and Gamble.
The informal sectors account for 40% to 70% of African markets, with an estimated 10 million informal retailers existing in Sub Saharan Africa. Sokowatch's innovative approach aims to create efficient supply chains in these markets by connecting large suppliers to shop owners.
According to David Yu, Sokowatch's CEO, 'We are eliminating the multiple layers of middle-men, from distributors to wholesalers and becoming a connective layer for manufacturers and small shops.'
The B2B e-commerce model works by digitizing orders, delivery, and payments, reducing costs and increasing profit margins. Informal shop owners order their products from Sokowatch's online platform by SMS, phone, and mobile app, while Sokowatch aggregates demand from FMCG suppliers and delivers the goods to the retailers by a fleet of tuk-tuks.
By aggregating demand, Sokowatch can negotiate better prices from suppliers and offer lines of credit and other financial services to its clients. The startup has made 500,000 orders to over 10,000 retail shops across Kenya and Tanzania, with plans to expand into Uganda and Rwanda.
The B2B e-commerce model is not new, with Alibaba in China and Udaan in India demonstrating its effectiveness. However, Sokowatch's innovative approach is revolutionizing the informal markets in Africa, providing a much-needed solution to the challenges faced by small-scale retailers.
