Cartona Secures $4.5M Pre-Series A Funding - Egypt Retail Tech

Cartona Secures $4.5 Million to Revolutionize Retail Connections

Cartona has recently announced the successful completion of a $4.5 million pre-Series A funding round. This investment is geared towards bolstering the company’s application, designed to forge direct connections between retailers and manufacturers.

Expanding the E-commerce Landscape in Egypt

The company aims to establish a significant presence within the rapidly evolving e-commerce and retail sector in Egypt. Several startups are currently contributing to this growth, including Capiter, a fellow year-old company that received attention last week.

Investment Details

Dubai-based venture capital firm Global Ventures spearheaded the funding round. Additional participation came from Pan-African firm Kepple Africa, T5 Capital, and a group of angel investors.

Addressing Supply Chain Challenges

Founded in August 2020 and based in Cairo, Cartona is dedicated to resolving the supply-chain and operational difficulties faced by businesses within the fast-moving consumer goods (FMCG) industry. It achieves this by facilitating buyer access to products from a diverse range of sellers through a unified platform.

Connecting Buyers and Sellers

In this context, buyers represent retailers, while sellers encompass FMCG companies, distributors, and wholesalers.

The Core Problem: Access and Transparency

Retailers in Egypt, and across much of Africa, frequently encounter limitations in accessing suppliers. Furthermore, a lack of transparency in market pricing, often tied to traditional logistical constraints, presents a significant challenge.

Supplier-Side Inefficiencies

Suppliers often struggle with a lack of comprehensive data and the inability to leverage data-driven insights for margin improvement and sustained growth, leading to suboptimal warehouse management.

A Light-Asset Marketplace Approach

“The existing trade market is fundamentally inefficient, creating disadvantages for both suppliers and manufacturers, and certainly for retailers,” explained CEO Mahmoud Talaat in a recent interview with TechCrunch. “Cartona was conceived as a fully light-asset model, directly linking manufacturers and wholesalers to retailers.”

Founding Team Expertise

Mahmoud Talaat co-founded Cartona alongside Mahmoud Abdel-Fattah. Prior to Cartona, Talaat established Speakol, a MENA-focused adtech platform reaching 60 million monthly users, and served as the chief commercial officer of Lamar Egypt, an agricultural company.

Platform Functionality and Benefits

Cartona operates as an asset-light marketplace. Grocery retailers can place orders through a carefully selected network of sellers. This approach provides enhanced visibility through real-time price comparisons and clear delivery timelines.

Data-Driven Optimization and Financial Access

Furthermore, FMCGs and suppliers can refine their go-to-market strategies utilizing data and analytics. Cartona complements this by offering embedded finance solutions and access to credit for both retailers and suppliers.

Revenue Generation Model

Cartona generates revenue through a multifaceted approach. It collects commissions on completed orders, charges suppliers for advertising opportunities to attract merchant attention, and provides valuable market insights regarding buyer behavior, price competition, and market share.

Leveraging Data for Retail Transformation

“The time is right to harness the power of technology beyond simply warehouses and transportation,” stated Abdel-Fattah, emphasizing the company’s commitment to providing information to retailers and suppliers. “Data and technology will drive the evolution of traditional retail towards a digitally native model, significantly enhancing supply chain efficiency.”

Current Platform Statistics

Cartona currently boasts a network of over 30,000 merchants. These merchants have collectively processed more than 400,000 orders, resulting in an annualized gross merchandise value of EGP 1 billion (~$64 million).

Extensive Product Offering

The platform also collaborates with over 1,000 distributors, wholesalers, and 100 FMCG companies, offering consumers access to more than 10,000 products, encompassing dry goods, fresh produce, and frozen foods.

Differentiating Through Asset-Light Strategy

While the company’s business and revenue model aligns with others in the sector, a key distinction lies in its asset ownership strategy.

Comparison with Competitors

In Egypt, for example, MaxAB operates its own warehouses and delivery fleets. Capiter employs a hybrid model, renting assets and maintaining inventory for fast-moving products. However, Cartona exclusively utilizes an asset-light model.

Prioritizing Collaboration Over Displacement

The CEO believes this model is optimal for all stakeholders in the retail market. He contends that avoiding asset ownership and instead enhancing existing infrastructure demonstrates a commitment to improving the operations of current suppliers and merchants, rather than replacing them.

Empowering Existing Infrastructure

“I firmly believe that the necessary infrastructure is already in place,” Talaat explained. “We have numerous warehouses, a wealth of small and medium-sized entrepreneurs, and established wholesalers, distributors, and companies possessing significant assets. To address the problem effectively, we believe in empowering those strategically located throughout Egypt who have the infrastructure but lack the technology to optimize their warehouses and logistics.”

Technology as an Efficiency Enabler

Suppliers with traditional warehousing often operate with narrow margins. Cartona provides the technology – an integrated inventory and ordering system – to enhance efficiency within their supply chains.

Investor Confidence in the Asset-Light Approach

Basil Moftah, General Partner at lead investor Global Ventures, stated that Cartona’s technology and its avoidance of inventory ownership were pivotal factors in the firm’s decision to invest.

Addressing Inefficiencies in the Trade Market

“The trade market is remarkably complex, yet characterized by numerous critical inefficiencies across the value chain,” Moftah noted. “Cartona’s asset-light approach tackles these inefficiencies by optimizing the trade process in unique ways, while minimizing capital expenditure.”

Future Plans and Expansion

The investment proceeds will be primarily allocated to further developing the company’s technology. Additionally, Cartona plans to expand its team and operations beyond its current base in Cairo and Alexandria to other regions of Egypt.

Long-Term Vision

Looking ahead, the company envisions potential horizontal and vertical product expansion into sectors such as pharmaceuticals, electronics, and fashion.