For aeons, Africa's informal retail market was like the proverbial diamond in the mud. A case study is the Nigerian market which is the largest on the continent. The market is valued at over $100 billion, yet shop owners experience difficulties in restocking goods due to a complicated distribution and supply chain. Despite the numerous challenges, their prospect is attracting interest from both local and foreign investors who are deploying technology to improve the sector.
Top on the list in recent years are B2B e-commerce brands like Alerzo, TradeDepot, Wabi2b who play majorly in the Nigerian market, connecting manufacturers, distributors and retailers through their digital marketplaces. In recent years, informal retailers who embrace these platforms are having better business experience. With tech-driven supply chain and logistics, sellers in several rural communities get their orders processed and delivered at their shops.
Retailers are not sole beneficiaries of B2B e-commerce companies. For instance, Alerzo provides warehousing and fulfilment solutions to suppliers. The company currently owns over 200 vehicles and 20 warehouses to serve thousands of retailers on its platform. Also, the ability of these e-commerce platforms to penetrate rural communities make them good data banks, as they are able to gather information from their first hand interaction with retailers. Such data can be useful to public agencies for developmental planning purposes, as well as manufacturers and distributors.
"The informal retail sector is huge and robust. Hence, our activities and services have far reaching impact and benefits for all stakeholders in the value chain," said Alerzo Limited CEO, Adewale Opaleye. He explained that a platform like Alerzo is a market aggregator and is not out to displace existing wholesalers/distributors in the chain. He said the company sees distributors as partners.
Another benefit for the market stakeholders is the increasing investment in logistics by e-commerce firms. The last couple of years have seen a rise in last-mile delivery and distribution companies with a large increase in on-demand services across many sectors. While most players in Nigeria tend to focus on Lagos and Nigeria’s capital city Abuja, B2B brands like Alerzo cover other cities and rural communities where informal retailers dominate.
The logistics investment of B2B e-commerce companies are also helpful to manufacturers and distributors, as these platforms transport the ordered goods from manufacturers’ and distributors’ warehouses to the target retailers, scattered all over the country. In some cases, the service comes at no cost to these manufacturers and distributors.
While retailers are seen as lead beneficiaries of the emerging B2B e-commerce trend, other stakeholders in the market stand to gain immensely from these tech investments. If the recent wave of digital activities in the informal retail sector is anything to go by, then the next five years promises a boom that would see the informal retail value chain make notable contributions in the Nigerian digital economy space.