Sokowatch, a Nairobi-based startup, has developed business-to-business e-commerce supply chains linking small-scale retailers to manufacturers such as Unilever and Procter and Gamble. In the context of developing markets, there is limited logistics infrastructure while the markets are predominantly informal without sophisticated supply chains.
According to Sokowatch, business-to-business (B2B) e-commerce supply chains present an investment opportunity for entrepreneurs. The informal sectors account for 40% to 70% of African markets with Sokowatch estimating about 10 million informal retailers exist in Sub Saharan Africa.
The idea is to create efficient supply chains in the informal markets by connecting large suppliers to shop owners. B2B focuses on understanding how the retailer manages the supply chain, especially for the FMCG. David Yu, Sokowatch’s CEO says,” We are eliminating the multiple layers of middle-men, from distributors to wholesalers and becoming a connective layer for manufacturers and small shops.”
ECommerce platforms digitize orders, delivery, and payments with the aim of reducing costs and increasing profit margins. In this case, the informal shop owners order their products from Sokowatch’s online platform by SMS, phone, and mobile app. Once the order is received, Sokowatch requests the aggregate demand from FMCG suppliers such as Proctor and Gamble and Unilever then deliver the goods to the retailers by a fleet of tuk-tuks.
Aggregating demand enables Sokowatch to get deals on products due to economies of scale. Sokowatch can now demand better prices from suppliers as it aggregates orders from the independent retailers into one source. Furthermore, the startup collects client data and uses it to offer lines of credit and other financial services.
Sokowatch says it has made 500000 orders to over 10000 retail shops across Kenya and Tanzania with planned expansion into Uganda and Rwanda.
The B2B e-commerce model is best demonstrated by Alibaba in China and Udaan in India.