Betastore, a Nigerian-based B2B retail marketplace for informal retailers, has raised $2.5 million in pre-series A funding from 500 Global, VestedWorld and Loyal VC, to expand operations to new markets across Africa.
The B2B marketplace, which was cofounded in mid-2020 by its CEO Steve Dakayi-Kamga and Leo-Armel Tchoudjang, enables informal traders to source fast-moving consumer goods (FMCGs) directly from manufacturers or distributors. The model keeps the prices of the products competitive by eliminating intermediaries. The startup works with logistics partners to ensure the delivery of goods within 24 hours.
Betastore plans to use the new fund to expand operations beyond its current markets – Nigeria, Senegal and Ivory Coast to Ghana, the Democratic Republic of Congo and Cameroon by the end of this year.
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“What is really important for us is to be able to continue to scale by leveraging our asset-light model. We plan to enter new markets before the end of the year and to expand to 100 cities across Nigeria, Ivory Coast and Senegal. We are also planning to reinforce our technology and leadership teams and to bring in new products and to improve existing ones,” said Dakayi-Kamga.
Sub-Saharan Africa has about 80% friction in its retail market, consisting of intermediary challenges such as stockouts and high cost of goods and services. Betastore’s aim is to solve the friction by providing a reliable retail marketplace for informal retailers across the African continent.
Per TechCrunch, Betastore is counting on its asset-light model, which eliminates any capital and labor intensive assets like warehouses or its own fleet of vehicles for delivery. Dakayi-Kamga said that this has helped the startup to optimize its technology to ensure that retailers source goods from the closest distributors. On average, a retailer using Betastore makes 4.4 orders per month.
“Our technology enables retailers to order on demand, access a variety of products and solves logistics headaches for them too. With Betastore, they don’t have to close their shops to go get goods from distributors stores or the market, and do not have to lose close to half of the margins in in the logistics,” said Dakayi-Kamga, who previously worked for Jumia, where he led the e-commerce platform’s logistics, warehousing and marketplace fulfillment department.
Betastore said it has recorded significant growth since it was launched two years ago, multiplying its customer base and revenues by 10 and 12 times, respectively. Having adopted the buy now pay later (BNPL) product, the startup anticipates greater growth as it expands across Sub-Saharan Africa, grabbing a large share of the continent’s retail market valued at $380 billion in 2021.
“We want to simplify access to goods and services for the retailers and for the end consumer because we see the merchant as an agent able to make access to goods and services easier. We started out in Nigeria, and we are expanding within Francophone Africa on our way to being a pan-African player,” said Dakayi-Kamga.
A new model Betastore plans to introduce is financing. TechCrunch reports that it will launch in July, after a pilot program involving 200 retailers that the startup carried out last year.
“We believe Betastore’s talented team is creating market efficiencies that have the potential to boost the growth of Africa’s retailers. With Betastore, merchants can get greater transparency into wholesaler inventories and price points,” Amit Bhatti, the principal at 500 Global said.
The BNPL financing strategy, Tchoudjang says, will be based on retailers’ sales and will go a long way in helping them to grow the value of their shopping baskets and ultimately their businesses. The startup plans to charge an interest based on product margins.
Partnership with payments firms is also a strategy the startup plans use to push its expansion. TechCrunch said Betastore is currently integrating its technology into a network of financing partners including fintechs and banks.
“The mandate of some of the partners we have on board is to support the economy by financing small businesses but are not able to lend to them because they do not have the data to inform decisions. We have the visibility of what is happening in this sector and have data they can use to extend financing,” said Tchoudjang, who previously held executive and leadership roles within the IFC-based AccessHolding AG network in Africa. He has also helped multinationals rollout fintech and microfinance products for emerging markets in the past.
With the financing, retailers use the Betastore wallet to repay loans, deposit money for their operations and to send, receive and save money.
“The wallet helps them separate their business money from their own money, and it is directly connected to the whole banking system, meaning that retailers can receive and send money to any bank and load cash with any agency banking platform,” said Tchoudjang.