Image Credit: Cartona
The one-year startup Capiter announced last week that high a $ 33 million Series A to digitize Egypt’s traditional offline retail market.
You are looking to win a big pie in the budding e-commerce and retail game, where various startups are doing their best, including Cartona, also a one-year startup from Egypt.
Today, Carton announces it has raised a $ 4.5 million pre-Series A funding round to connect retailers and manufacturers through an app.
The company confirmed that Dubai-based venture capital firm Global Ventures led the round, with pan-African firm Kepple Africa, T5 Capital and angel investors also participating..
Cairo-based Cartona founded in August 2020 is focused on solving the operational and supply chain challenges of Fast Moving Consumer Goods (FMCG) industry players by helping buyers access to sellers’ products on a single platform..
The buyers, in this case, are retailers, while the sellers are consumer goods companies, distributors, and wholesalers.
The problem facing retailers in Egypt and most of Africa revolves primarily around limited access to suppliers. There are also issues around transparency in market prices, which depend on traditional logistics capabilities.
For vendors, a lack of data and the inability to make data-driven decisions to improve margins and aid growth add to under-optimized warehouses.
“The merchant market is completely inefficient and it is not good for the supplier or for the manufacturers, and it is definitely not good for the retailers,” CEO Mahmoud Talaat told TechCrunch in an interview.. “So we came up with the idea for Cartona, which is basically to completely lightweight asset model connecting manufacturers and wholesalers with retailers. “
Talaat founded the company together with Mahmoud Abdel-Fattah. Prior to Cartona, Abdel-Fattah founded Speakol, a MENA-focused ad technology platform serving 60 million monthly users, while Talaat was the commercial director of agricultural company Lamar Egypt..
Cartona works as a market for light assets. On the platform, grocery retailers can get orders from a selected network of sellers. The company says that in this way, it can provide visibility through real-time price comparisons and clarity on delivery times.
Additionally, consumer goods and vendors can optimize their go-to-market execution through the use of data and analytics. Cartona tops it off by providing integrated financing and access to credit to retailers and suppliers.
Cartona makes money through all these processes. A commission is charged for placed orders, charges vendors for posting ads to merchants (as they compete for the latter’s attention), and provides market insights on buyer behavior, price competition, and market share ..
“It is time to capitalize on technology beyond warehouses and trucks. Data and technology will transform traditional retail into a digitally native one, which in turn will dramatically improve supply chain efficiency, ”Abdel-Fattah said of how the company sells information to retailers and suppliers.
Cartona has more than 30,000 merchants on its platform. Together, they have processed more than 400,000 orders with an annualized gross merchandise value of EGP 1 billion (~ $ 64 million). Cartona also works with more than 1,000 distributors, wholesalers and 100 mass consumption companies, offering consumers more than 10,000 products, including dry, fresh and frozen foods..
The business model and income of the company is Similar to other companies in this space, but tThe main difference is whether they own assets or not.
Taking a look at the players in Egypt, for example, MaxAB operates its warehouses and fleets; Capiter uses a hybrid model where it leases these assets and owns inventory when it comes to high-turnover products.. But Cartona only manages a lightweight asset model.
The CEO tells me that he thinks this model works best for all stakeholders involved in the retail market. It maintains that not owning assets and leasing those that are on the ground shows that the company is trying to improve operations of existing suppliers and traders instead of displacing them.
“I believe that the infrastructure already exists. We already have many warehouses, many small and medium entrepreneurs, and wholesalers and distributors and companies that have many assets.. If you want to fix the problem, We think one must train people who are strategically located in small streets all over Egypt and have the infrastructure, but do not have the necessary technology to optimize their warehouses and carts. “
Current margins for suppliers with warehouses are slim and Cartona provides the technology, an inventory and ordering system, to provide efficiencies in your supply chain.
The general partner of leading investor Global Ventures, Basil Moftah, said in a statement that Cartona’s technology and owning no inventory was instrumental in the company’s decision to back the company..
“The commercial market is one of the most sophisticated, but [it is] characterized by multiple critical inefficiencies throughout the value chain, ”he said. “Cartona’s asset-light approach addresses those inefficiencies by optimizing the business process in unique ways and it does so with minimal capital invested. “
The investment returns are focused on improving this technology, Talaat said. What’s more, Cartona is expanding its team and operations beyond two cities in Egypt, Cairo and Alexandria, to other parts.
A longer-term plan could include horizontal and vertical product expansion into pharmaceuticals, electronics, and fashion..