Nigerian e-commerce platform Traction has announced the raise of $6 million in seed round to scale its Nigerian operations. The funding round was led by Multiply Partners and Ventures Platform, with participation from P1 ventures, amongst other investors.
Traction disclosed that it will use the funds raised to drive expansion, accelerate growth, and strengthen the company’s team.
Speaking on the funds raised, Traction co-founder Mayowa Alli said,
“Our goal at Traction is to be the digital operating system for businesses on the continent. We want to help them digitize their operations, efficiently manage finances, and make beer-informed decisions”.
According to Alli, Traction serves two categories of merchants, which are classic and premium. He cited street food sellers and tiny neighborhood convenience stores as examples of this first category. He said that Traction is generally the first engagement with digital payment acceptance and financial services for these merchants, who comprise 75% of the platform’s user base.
Premium merchants, on the other hand, are more formal and have left banks in favor of Traction’s more appealing products. Notably, both categories occur in various sectors, including five verticals for which Traction has developed customized solutions: food and restaurants, FMCG and grocery chains, fashion, beauty, and lifestyle enterprises, electronics stores, and healthcare facilities.
Founded in 2020 by Mayowa Alli and Dolapo Adejuyigbe, Traction is a fintech company that allows merchants to receive payments, manage accounts, and access operational tools, which include invoicing, full retail POS system, and e-commerce.
Traction products meet the specific needs of its retail business owners, in contrast to platforms such as Opay, Moniepoint, and Nomba, which use agent-led models by distributing POS terminals before adding software and business tools to complement the terminals.
The startup said it has set itself apart in the competitive merchant acquiring space by maintaining a dedicated focus on businesses, unlike many agent-led models attempting to pivot toward business services. Its company’s industry-specific software, including its financial services marketplace, offers relevant business solutions, affordable capital, and insurance.
Traction says it has gained more merchants across Africa’s largest financial services sector than its competitors since its inception. The Fintech company reported a 7x increase in revenue and an 8x increase in transactions last year while serving over 70,000 businesses across Nigeria. On the credit side, the founders noted that Traction has disbursed over N2 billion in loans, with one of the lowest NPL ratios in the industry.
Traction aims to maintain the upward growth trajectory, as it seeks to provide businesses with a seamless payment process and enhance their overall operations.
Meanwhile, in this sector, Amazon has been accelerating its delivery efficiency at the global level.
Days before reporting second-quarter earnings, Amazon said it will double the number of its same-day delivery warehouses in “coming years.” The company also noted it had quadrupled the number of packages delivered the same day or within one day this year, to 1.8 billion, from the first half of 2019. While Amazon vies to stay ahead of rivals in the $1.4 trillion e-commerce market, the pace of online sales has slowed since the pandemic, pushing the company to become more dependent on its cloud-computing unit for profit.
As Amazon does that, Walmart is investing big in India.
Walmart has paid $1.4 billion to buy major investor Tiger Global’s remaining shares of Indian e-commerce giant Flipkart, The Wall Street Journal reports. While Walmart initially invested in the company in 2018, when it paid $16 billion for a 77% stake, its buy-in now gives it more exposure to the booming international digital-consumer market. Flipkart said last month its customer base stands at more than 450 million, while it sells over 150 million products across 80-plus categories through its marketplace.The transaction puts Flipkart’s value at $35 billion — down about $3 billion from 2021, when the company last sold shares to Walmart.
As Amazon and Walmart deepen their businesses, apps like Pinterest and TikTok are also accelerating ecommerce: “Pinterest’s latest earnings suggest its bid to inspire users may also be inspiring sales — and that it could have strong potential as a commerce player. The social media company posted better-than-expected revenue of $708 million in the second quarter, up from $666 million one year ago. The reason for the turnaround, according to CEO Bill Ready, is that “shopping is working on Pinterest” and helping spur engagement. Ready’s push to make Pinterest more shoppable, including a recent partnership with Amazon, has coincided with gains in monthly active users. Not all investors are happy, however, with some citing ballooning costs that are outpacing revenue growth.By 2026, U.S. sales on social media are expected to reach $130 billion. TikTok is also pursuing a social commerce strategy and is currently beta testing its TikTok Shop with U.S. users.”