Onyekachi Izukanne is the CEO of Nigeria-based TradeDepot, a digital platform that connects consumer goods manufacturers to informal retailers. Established in August 2016 by Izukanne and co-founders Michael Ukpong and Ruke Awaritefe, the company has more than 200 employees and roughly 40,000 micro-retailers (kiosks, spaza shops and mini-markets) that use its platform to procure basic household goods from manufacturers such as Unilever, Nestlé, Danone and Kellogg’s. TradeDepot delivers to stores, acting as a full-time distributor to its retailer network. Jeanette Clark talks to Izukanne about the company’s growth and future plans.

What is the main focus of TradeDepot?

The original idea, which we have executed, was to connect informal retailers directly with the manufacturers that produce consumer goods and remove the need to purchase at open markets. We wanted to provide the retailers with affordable access to these fast-moving consumer goods (FMCG) on our platform; and we have now added the possibility of providing credit.

Describe your typical retail customer.

Our typical customer is female, operates in a store that is about 5m² and has a turnover of between $1,000 and $5,000 per month. The average store carries a range of between 100 and 300 SKUs.

Tell us more about the credit product.

We’ve been running a pilot for about four months and the initial results are looking positive. We are able to keep our default rate at levels we expected when we went in. The goal is to wind down the pilot by the end of the year and then roll it out.

The most important metric is to look at our portfolio at risk after seven days; payments due that haven’t been paid by the seventh day. Currently, this is below our target level of 1%.

We don’t give cash to the retailers; we give them credit to buy the products on our platform up to a certain value that is kept on an internal wallet. Therefore, the scope of our target borrower is limited to customers on our platform. We are committed to always operating within the bounds of whatever regulations are in place and are currently in the process of getting all the required registrations within Lagos State. Afterwards, we will expand to the rest of the country.

Initially, how difficult was it to convince manufacturers as well as the micro-retailers to use your platform?

With any marketplace you would have that chicken and egg situation: the platform is more attractive to suppliers when there are retailers on it and it is more attractive to retailers when there are suppliers.

Our value proposition to get the first manufacturers on board was to offer them our systems to streamline their order and inventory management. This persuaded them and meant we had some products to present to the micro-retailers.

Informal retailers are not necessarily the type that will immediately jump on new tech that is available. We had to find a way to communicate sustainable value to them. Simply offering a discount does not cut it. They might procure for the discount, but afterwards, they return to their previous suppliers.

It took about six months to grow from that first retailer to the first 1,000. It was an interesting period during which we learnt for who the platform was most suited, what the correct margins were and how to add value without losing too much.

Originally, to build sustainable relationships, we employed sales executives per geographical location. They were like store managers who had a number of streets assigned to them and would engage with the retailers to build trust. Over time, they would demonstrate the digital platform, often using transparency around pricing as a hook. The retailers like to see the price of any product at any given time and decide when to order.

How did TradeDepot grow from these 1,000 retailers to the current 40,000?

To be honest, because we are in the middle of operations, looking back it seems like a continuum. Of course, certain things do get easier. After the first 10,000 stores, the acquisition of new manufacturers or suppliers started to look different. In addition to the capability of the platform and what it offers, the existing retailer base became a big draw. Now that we have over 40,000 retailers, we field a lot more inbound requests from manufacturers wanting to see how they can work with us to drive their route to market.

From a customer acquisition standpoint, one thing we keep learning is how important it is to evolve the customer experience to make sure each retail customer is still deriving value: from onboarding a store to the mechanisms used to drive loyalty and ensure they get onto the right service channels and support when they need it.

Are there any barriers for retailers to use your platform, e.g. technology?

We present them with a few channels and have seen that across the spectrum of retailers, different options are preferred. Our field agents help with the acquisition of the retailers and get them onto the platform, then they put them in touch with our in-house teams who engage with them.

Post onboarding, there are different channels available to the retailers. They can use the app on a smartphone and because this is our preferred channel, we offer a few advantages such as the credit offering. If they use a feature phone, there is a USSD shortcode option. The service also operates on WhatsApp.

In addition, we provide a toll-free inbound telesales service as well as outbound telesales agents who drive onboarding as well as retention.

How valuable is the data you gather?

The data is critical as it drives all our planning and execution. We have realised this is probably the biggest asset for the suppliers. They want to know exactly where the volumes are going, the locations, what type of stores and what SKUs are moving at what times. During the last four years, we have been able to make this information available in different formats but we are still looking at ways to monetise it, perhaps on a subscription basis.

We also use the data to assist informal retailers to understand which products will move quickly and where to spend their money.

What are your expansion plans?

We are ramping up to be operational in 15 cities across Nigeria including Abuja, Kano, Kaduna, Benin City, Aba, Onitsha, Owerri, Port Harcourt, Ibadan and Abeokuta. We are also running pilots outside the country but I can’t yet divulge the location of these.