Alerzo Raises $10.5M Series A to Digitize Nigerian Retail

Digitizing Nigeria's Informal Retail: Alerzo Secures $10.5 Million Series A

The modernization of operations within small, family-owned businesses in Nigeria is currently a significant area of focus. Indeed, this transformation may represent the most impactful development occurring in the country presently, second only to the growth of the fintech industry.

Alerzo's Funding Announcement

Recent news highlights Alerzo, a B2B e-commerce retail startup operating from Ibadan, Nigeria. The company has announced a successful $10.5 million Series A funding round, spearheaded by Nosara Capital, a firm based in London.

Participation in this round included FJ Labs and a number of family offices originating from the U.S., Europe, and Asia, notably including those associated with Michael Novogratz.

Total Funding to Date

To date, Alerzo has secured over $20 million in funding since its inception.

Initial investments were provided by the Baobab Network, an Africa-focused accelerator located in London, and Signal Hill, a fund manager based in Singapore, which contributed to the company’s $5.5 million seed round last year.

Furthermore, Alerzo has finalized a $2.5 million working capital facility designed to support its customer base.

Founding and Core Mission

Alerzo was founded in 2018 by Adewale Opaleye, with the initial aim of creating a last-mile distribution platform for retailers.

The company, officially launched in 2019, concentrates on providing quicker and more efficient access to household supplies for street-side vendors and shops located in Nigeria’s south-western cities.

Empowering Women in Retail

Opaleye shared with TechCrunch that his motivation for establishing Alerzo was to empower the millions of women who form the core of consumer commerce within Nigeria’s $100 billion informal retail sector.

This ambition arose from observing the difficulties his mother encountered while managing two small retail stores.

“During my upbringing in Ibadan, I witnessed my mother’s operation of two informal retail stores to support my three siblings and myself. Recognizing the numerous obstacles she faced, I resolved to create a business specifically tailored to the needs of retailers like her,” he explained in an interview with TechCrunch.

Addressing Systemic Challenges

These retailers are hampered by an inefficient distribution network, leading to inconsistent stock levels, unclear pricing structures, and limited access to traditional financial services.

The founder indicated that Ibadan was chosen as the ideal location for the company’s headquarters due to the more pronounced challenges faced by informal retailers in that region compared to those in Lagos.

Alerzo's Business Model

Alerzo’s primary function involves the distribution of Fast-Moving Consumer Goods (FMCG) through a first-party relationship platform.

This approach enables suppliers to expedite inventory clearance while granting Alerzo greater control over the supply chain and delivery processes.

Considering the prevailing lack of trust in the marketplace and the necessity for payment upon delivery, Opaleye asserts that this model represents the most viable economic solution for the company.

Network and Reach

Alerzo reports having cultivated a network of up to 100,000 small businesses, with 90% being women-owned.

The company currently focuses its services on tier-2 to tier-4 cities in Southwest Nigeria – including Ibadan, Ekiti, and Abeokuta – connecting retailers with both local and multinational distributors of consumer brands such as Unilever, Nestlé, Procter & Gamble, Dangote, and PZ.

Improving Retailer Livelihoods

“Without Alerzo, these retailers are required to close their stores for a day to visit central markets, cover transportation costs, and transport large quantities of inventory back to their shops.

Alerzo streamlines this process, reducing both costs and time spent on retail operations, and ultimately enhancing the livelihoods of these working women,” the founder stated regarding the company’s expansion.

Platform Usage and Order Volume

Approximately one-third of the total retailers utilizing Alerzo’s platform do so on a monthly basis.

According to the company’s website, retailers can place orders via SMS, voice calls, and WhatsApp, with delivery to their stores occurring within 10 hours. Alerzo claims to have processed over 1 million orders in the past year.

Supply Chain and Logistics

Alerzo maintains ownership and operation of its fully integrated, technology-driven supply chain and logistics network to manage these orders.

The company provides warehousing and fulfillment services to suppliers, alongside storefront delivery to informal retailers. Currently, Alerzo operates a fleet of over 200 vehicles and 20 warehouses to serve its extensive customer base.

Growth in Last-Mile Delivery

The past few years have witnessed a surge in last-mile delivery and distribution companies, accompanied by a significant increase in on-demand services across various sectors.

While many companies in Nigeria concentrate on Lagos and Abuja, Alerzo’s strategy of targeting other cities has proven successful thus far.

Competitive Landscape

Despite Alerzo’s early advantage in less competitive markets, increased competition is anticipated as other major players enter the field.

Omnibiz, for example, has set its sights on Ibadan, and TradeDepot is expanding its presence to 10 to 15 cities, with the goal of covering all major cities in the country by year-end.

Investor Confidence

Despite the emerging competition, Alerzo’s investors remain optimistic about the company’s potential.

“Over the last couple of years, we’ve analyzed informal retail marketplaces globally, and Alerzo distinguished itself through a robust management team, led by a founder with a deep understanding of his customers, and an appealing business model with strong unit economics,” stated Ian Loizeaux, managing partner at Nosara Capital.

“The company is positioned to capitalize on a substantial, multi-decade opportunity to optimize and digitize Nigeria’s retail supply chain.”

Strategic Focus and Global Insights

Kevin Jung of Signal Hill, an early investor, highlighted Alerzo’s focus on the informal retail market outside of Lagos as a key reason for his initial investment.

He also noted the company’s orientation towards Asia – a strategy Opaleye adopted during his studies in China in 2016 – as a valuable reference point for the evolving business model of digitizing informal retail markets.

Alerzo maintains an office in Singapore, which the CEO describes as a regional hub for identifying and adapting best practices from similar high-growth businesses operating in Southeast Asia and India to the Nigerian market.

Additionally, the company recently established an office in Lagos to further expand its digital reach.

Future Plans

The funds from this Series A round will be allocated to geographic expansion into northern Nigeria.

Alerzo also intends to launch AlerzoPay, its cashless payments and lending platform, alongside a suite of new business support services.