Omnibiz Secures $3M Funding to Digitize Nigerian B2B Supply Chain

The Dominance of Informal Retail in Africa and the Rise of Digitization

Despite the growing number of shopping centers and the investment in e-commerce platforms such as Jumia, informal retail continues to be the primary method of commerce across Africa.

A 2016 PwC report indicates that 90% of sales within major African economies are conducted through informal channels, including local markets and small kiosks.

This widespread informal sector represents a significant opportunity for digitization, and numerous African startups have emerged in recent years to address this challenge, securing substantial funding in the process.

Omnibiz Secures $3 Million Seed Funding for Expansion

Joining this wave of innovation is Omnibiz, a Lagos-based startup that has recently raised $3 million in a seed funding round to facilitate expansion into new markets.

Omnibiz functions as a B2B e-commerce platform, streamlining the supply chain by connecting manufacturers of fast-moving consumer goods (FMCGs) directly with retailers.

Retailers can utilize a mobile application, a WhatsApp channel, or a dedicated phone number to conveniently order stock for their businesses.

According to Omnibiz, retailers are able to place orders at their convenience and receive deliveries to their locations without incurring any additional costs.

The Founding and Evolution of Omnibiz

Omnibiz was established in 2019 by Deepankar Rustagi, an Indian entrepreneur who has resided in Nigeria for over two decades.

Prior to Omnibiz, Rustagi founded VConnect in 2011, an online marketplace and search engine designed to connect individuals with local service professionals.

VConnect successfully linked users with over 100 different services and more than 500,000 businesses nationwide before its closure in 2017, as stated by Rustagi.

Following the conclusion of VConnect, Rustagi provided consulting services to several FMCG brands.

Through this experience, he identified a critical need for manufacturers and retailers to modernize their processes, ultimately leading to the creation of Omnibiz in late 2019.

An Asset-Light Retail Distribution Model

Omnibiz employs an asset-light retail distribution strategy.

When a retailer places an order through the Omnibiz platform, the request is forwarded to partner distributors who maintain inventory on behalf of manufacturers and traditionally handle warehousing and transportation.

This allows these distributors to concentrate specifically on warehousing, while Omnibiz’s third-party logistics providers assume responsibility for delivering goods to retailers.

Drivers associated with these logistics providers leverage the Omnibiz platform to efficiently manage and execute deliveries within a 24-hour timeframe.

How Omnibiz Operates

“We collaborate with manufacturers to enhance visibility, procure goods from them, and store them in partner hubs that function as warehouses and distribution centers,” explained Rustagi to TechCrunch.

“Subsequently, we utilize the services of drivers affiliated with third-party logistics companies, who are compensated for each delivery completed.”

This digitization of the supply chain enables retailers to conserve working capital, while simultaneously connecting them with over 20 prominent brands, including Coca-Cola, Nestlé, Kellogg’s, Unilever, Procter & Gamble, and Kimberly-Clark.

Current and Future Geographic Reach

Currently, Omnibiz operates in four Nigerian cities: Lagos, Abuja, Port Harcourt, and Kaduna.

The company plans to expand its presence to two additional cities, Ibadan and Kano, before the end of August, according to Rustagi.

Learning from Past Experiences

Rustagi believes that Omnibiz will benefit from the lessons learned during his time with VConnect, his previous venture which faced challenges in monetization and scaling despite achieving significant traction as a popular local marketplace.

“We possessed a strong understanding of small businesses and the types of technology they favored. This was our area of expertise, however, our initial business model proved unsustainable.

“In contrast, with Omnibiz, monetization occurs directly on our platform, and there is a clear opportunity for small businesses to generate revenue. We have experienced a 30% month-over-month growth rate for the past 12 months,” he stated.

A Resurgent B2B E-commerce Market

The B2B e-commerce market, particularly within the informal sector, has experienced renewed growth in recent years.

Companies such as Kenya’s Sokowatch and Twiga, Nigeria’s TradeDepot, and Egypt’s MaxAB have been actively competing for market leadership in their respective regions.

The pandemic further accelerated interest in these businesses, with numerous startups, including Kenya’s MarketForce and now Omnibiz, securing funding in the past year.

The Asset-Light Approach

Some companies adopt asset-light models, while others assume full responsibility for managing the entire digitization process.

Rustagi believes that the asset-light approach is ideal for Omnibiz, as it empowers distributors to broaden their reach rather than displacing them.

“Scaling in a single city with owned assets is manageable, but expanding to 20 or 24 cities across a country like Nigeria, Ghana, or Ivory Coast, or East Africa, would require substantial investment,” Rustagi explained.

“Therefore, we believe that we can scale more rapidly without significant investment in assets. Furthermore, our tech-first approach provides us with strong control over the business. I am confident that we are in the right position, at the right time, with the right model.”

Investment Details and Future Plans

Omnibiz’s seed funding round was spearheaded by V&R Africa, Timon Capital, and Tangerine Insurance.

The round also included participation from Lofty Inc., Musha Ventures, Sunu Capital, Launch Africa, and Rising Tide Africa, bringing the company’s total funding to $4 million.

Rustagi also revealed that the company received funding from Seedstars and will participate in the accelerator’s growth program.

“We believe Omnibiz has the potential to become a leading example for B2B retail in Africa and can successfully scale into other emerging markets. We are excited and pleased to support Omnibiz in all ways, beyond simply providing capital,” stated Raj Kulasingam and Vishal Agarwal of V&R Africa.

Over the coming months, Omnibiz intends to utilize the investment to expand its operations into additional West African cities, including Abidjan, Takoradi, Kumasi, and Accra.

The company’s platform currently focuses on food, non-alcoholic beverages, personal care, and baby care products, with plans to expand into new categories such as alcoholic beverages and over-the-counter pharmaceutical products.

Enhancing Value for Retailers

Omnibiz will also leverage the investment to develop new technological products that will further enhance value for retailers.

The company will collaborate with partners to increase access to working capital for retailers and provide digital tools to streamline their business operations.

“One of our primary goals is to onboard medium-scale manufacturers who face challenges in achieving last-mile delivery to customers,” said the CEO of Omnibiz, outlining the company’s future plans.

“We aim to help them scale their reach to a larger number of retailers. We are currently implementing this initiative to onboard more and more manufacturers.”