When Deepankar Rustagi final raised cash for OmniRetail in 2022, pleasure was excessive for African startups addressing the availability chain and operational challenges within the fast-moving client items (FMCG) sector. At one level, these startups acquired extra capital than all sectors, besides fintech.
Lately, although, the trade’s enthusiasm and enterprise capital’s curiosity have light, as varied enterprise fashions have struggled beneath mounting strain.
But for Rustagi, OmniRetail isn’t simply one other B2B commerce platform; it’s an bold effort to reshape casual retail throughout Nigeria and West Africa utilizing expertise and embedded finance in a scalable, worthwhile manner. Now, that imaginative and prescient has acquired additional endorsement with a $20 million Collection A fairness funding spherical. This capital will assist OmniRetail broaden its presence in Nigeria, Ghana, and Ivory Coast, whereas deepening its give attention to embedded finance merchandise.
The spherical was co-led by Norwegian growth finance establishment Norfund and Lagos-based VC agency Timon Capital, with follow-on participation from Ventures Platform, Aruwa Capital, Goodwell Investments (by way of Alitheia Capital), and Flour Mills of Nigeria.
This marks Norfund’s first direct fairness funding in an African startup, and in accordance with Rustagi, places OmniRetail on a path to dominating in a section the place others have struggled to develop profitably. OmniRetail has raised $38 million in fairness and debt since its inception in 2019.
OmniRetail’s mannequin digitizes order administration for 145 producers, greater than 5,800 distributors and companies over 150,000 casual retailers throughout 12 cities in Nigeria, Ghana and Ivory Coast.
Retailers use the app to order stock, entry working capital, and make digital funds. Within the background is a third-party logistics community of over 1,100 automobiles and distributed warehousing capability managed by 85 native logistics companions.
OmniRetail’s asset-light technique has been essential in hitting profitability. In 2023, the Lagos-based B2B e-commerce platform turned EBITDA optimistic. In 2024, it turned internet worthwhile. An identical story is unfolding in Egypt, the place one other B2B e-commerce platform, Cartona, owes its push towards profitability to the mannequin.
Each CEOs have famous that Africa’s casual market is huge and made up of suppliers and distributors that don’t must be displaced or competed towards, however moderately made extra environment friendly with the tech instruments offered by their platforms.
“The profitability journey was an final result of our effectivity on using the property that we aggregated within the community, and this has confirmed that the mannequin that we put collectively as a ‘community of networks’ is worthwhile and is very scalable, Rustagi mentioned. “That’s the rationale we went forward and lift the capital to lastly put the metallic on the pedal and scale in additional geographies and in additional classes. We’re increasing not simply to develop, however to optimize.”
Higher occupancy in warehousing, smarter logistics routes, and deeper class penetration will all enhance margins, he added.
Rustagi, in a dialog with TechCrunch, alongside OmiRetail’s head of funding, Archit Bagaria, additional defined that the corporate’s progress additionally lies in a deep understanding of the FMCG retail ecosystem, with the whole management crew boasting many years of expertise.
In keeping with them, it affords a novel benefit of understanding how the worth chain works, who the important thing gamers are, and the place the gaps in visibility exist.
“For years, items have been shifting from level A to level B, however the lack of transparency has hindered monetary inclusion and prompted inefficiencies within the course of,” mentioned Bagaria. “By constructing an ecosystem that streamlines this complete panorama, we are able to resolve these issues.”
As soon as a startup reaches crucial mass, Bagaria provides, it turns into simpler to layer extra companies, comparable to funds and buy-now-pay-later (BNPL), on high of its present infrastructure. “Our strategy has been completely different from others, and we consider we’ve discovered success with this mannequin,” Bagaria added.
Not like different startups that jumped into providing credit score merchandise too early or mistimed the launch, OmniRetail waited till it had vital distribution scale and information. Due to this technique, OmniRetail processed over ₦1.3 trillion (~$810 million) in transactions final 12 months, with Omnipay, its BNPL product, disbursing ₦19 billion month-to-month (~$12 million) in stock credit score, boasting near-zero defaults, in accordance with the corporate.
Buying Nigeria-based service provider answer platform Traction Apps in 2024 additional strengthened OmniRetail’s technique. Traction gives full-stack fee capabilities, together with POS terminals, PSSP and Tremendous Agent licenses, and entry to retailer-level gross sales information.
For OmniRetail, the acquisition permits it to realize a whole monetary profile of every retailer, giving it even higher management over the availability chain and the power to supply tailor-made monetary options.
“Each transaction within the FMCG worth chain has two sides: the motion of products and the motion of funds,” mentioned Rustagi. “Right now, we’re able to combination most advantages from each transaction within the worth chain. Our plan is to dive deep into the worth chain and maximize margins. Worldwide gamers have completed nicely of their markets, and we’re bringing that mannequin to Nigeria at this time.”
Whereas it now not publicly discloses GMV figures, shifting away from the metric that has lengthy been a key efficiency indicator within the sector, it stories a 35% improve in internet merchandise quantity (NMV) and a 40% bump in income over the previous 12 months, all whereas sustaining profitability regardless of its growth.
A few of our subsequent strikes are laser-focused: a stable debt elevate for stock finance, strategic acquisitions, and a relentless worthwhile progress.”
With $20 million in recent capital, OmniRetail plans to proceed rising its retailer base and broaden into new product classes like private care, dwelling care, and chilly storage.
The capital may also improve its infrastructure, improve its credit score underwriting instruments, and strengthen partnerships with home debt suppliers. As such, a few of its subsequent strikes embrace a debt elevate for stock finance and strategic acquisitions, in accordance with Bagaria.
For Norfund, OmniRetail represents greater than only a fintech or commerce wager; it’s infrastructure.
“Embedded finance is among the most transformative instruments for small enterprise progress in Africa,” mentioned Norfund Investor Director Cathrine Conradi. “OmniRetail’s mannequin brings capital to areas the place conventional techniques haven’t reached.”
In the meantime, Timon Capital, which backed OmniRetail from its seed stage, sees this as a breakout second for the corporate.
“OmniRetail has now hit an inflection level in distribution, funds, and credit score, exhibiting simply how a lot worthwhile progress they’ll generate with their increasing footprint,” the agency mentioned.
