Building the D2C eCommerce Operating System for African SMBs

Emotu Balogun knows all too well the important role that logistics play when running an effective marketplace.

The Nigerian entrepreneur got his start at a fashion marketplace where he gained key insight into the difficulties surrounding fulfillment and how it stood in the way of scaling operations.

In trying to fix the problem for that marketplace, the idea for Sendbox was born, creating an eCommerce fulfillment platform that offers affordable local and international deliveries for small-scale merchants.

Balogun and his co-founder, Olusegun Afolahan, realized that the customers who needed their services the most were merchants who had started selling directly to their customers on social media platforms like WhatsApp, Instagram and Facebook, instead of using Jumia or on Amazon. And those are the sellers they have chosen to serve since launching the business in 2018.

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Like many eCommerce-related businesses, the pandemic spurred their growth as the lockdowns forced merchants selling via offline channels to move online. And Balogun said “even though lockdowns are no longer a thing, the momentum has been maintained till now,” with their monthly revenues doubling since March 2020.

To date, the company boasts 200 million Instagram users and 1 million Instagram businesses in Nigeria alone, where it has completed over 200,000 shipments for the 10,000-plus local small- to medium-sized businesses (SMBs) it supports, marking a 300% gain since launching.

This month, the Lagos-based firm announced the completion of a $1.8 million seed funding round from investors, including 4DX Ventures and Enza Capital, bringing its total investment raised to $2 million.

Aggregating Solutions for Merchants

Balogun said the company has processing centers where products are consolidated and batched, even though items are not stored for its merchant clients.

“We really focus our strategy on providing first-mile and last-mile support, and this works for a lot of small merchants because many of them don’t need warehouses,” he explained.

He said one market-specific challenge the company faces when it comes to operating a logistics business in Nigeria is the country’s poor address system. While U.S. or U.K. addresses, for example, can be easily found on either Google Maps or with a standardized application programming interface (API) provided by the postal system, he said it’s not the same in Nigeria, and as a result, “it poses a lot of planning and optimization challenges.”

Another challenge, he said, is the lack of coordinated effort and activity between the big transport players like DHL and FedEx, and smaller players in the market. It’s a problem Sendbox is addressing by working with both big and small players and aggregating their services through a simple interface, a mobile app and an API to make deliveries easy.

That aggregation also helps provide solutions for small merchants who lack the high volumes to qualify for discounted delivery fees, in addition to customer service and operational support that the startup offers to make the lives of smaller merchants easier.

All merchants need to do is to provide information on where packages are coming from, where they’re going and how much they weigh, and Sendbox takes care of the rest.

“You don’t really care who’s going to come pick it up and how it’s going to get to where it needs to go,” Balogun said.

Conquering the West

The next stage of the company’s growth is to use the funding it has raised to boost the development of its product range with financing and payments as eCommerce and marketplace integrations, while expanding beyond its home market into other countries across West Africa.

The firm has a keen interest in Francophone Africa, which is in line with its West Africa expansion given that the sub-region is home to several French-speaking countries like Senegal, Côte d’Ivoire, Mali and Burkina Faso.

“We’ve entered the space from the fulfillment and logistics angle, but our mission is to become the eCommerce operating system for these merchants, and so what we want to be able to do is consistently solve more and more of their problems moving forward,” he said of the company’s wider goal.

The startup is solving problems, such as fulfillment, finding the right kind of inventory to purchase, gaining access to customers, and dealing with cross-border payments, one step at a time, Balogun said.