Interview: Sokowatch CEO on opportunities in the micro-retail sector amidst a global pandemic

Kenyan business-to-business e-commerce company Sokowatch is focused on its mission of digitizing Africa’s informal supply-chain. Since 2016, the startup has used its platform to connect micro traders, merchants and shop-owners to local and multinational manufacturers. Sokowatch has digitized orders, payments and logistics by enabling informal retailers to order products at any time via SMS or mobile app, and receive free same-day delivery to their store.

 

Over the last four years, the B2B company has expanded across Kenya and into Tanzania, Uganda and Rwanda with 15,000 retailers on the platform. Having raised a $2 million in 2018 and closing $14m investment in February 2020, Sokowatch is looking at deepening its data analytics capabilities as well as increasing working-capital support to retailers.

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Mobilife caught up with Sokowatch CEO Angela Nzioki who revealed the challenges and opportunities Covid-19 has presented to retailers, manufacturers and supply chains in the region.

 

We know that Covid-19 has disrupted supply chains globally and locally. With Sokowatch having a pulse on the supply and demand side, what is the extent of the disruption in East Africa in general and Nairobi in particular?

 

I’m not sure anyone or business can confidently say they were prepared for COVID-19 and its ensuing challenges. At the beginning of the pandemic, there were some disruptions to the supply chain but luckily the informal retailers we cater to have been classified as essential workers. As a result, shops have remained open during this difficult time and we have been able to supply them with the essential goods such as rice, flour and soap that they need to supply the community. This is the case across all the markets we operate in. We have very good relationships with manufacturers and distributors and have ensured that goods are available as and when needed. 

 

Have you experienced a significant drop in orders?

 

As a result of retail shops being classified as essential workers, they have continued to order as usual. What we have seen is a drop in order sizes by about 10%. Most shops are concentrating on stocking flour, rice, sugar, and soap which have become priority purchases, while other products have become more on a need-to-have basis. Understandably so, as consumers buying capacities are also limited to these few selected priority products.

 

How was the small scale informal retail sector performing pre-covid 19?

 

It was performing quite well with 15,000 retailers on our platform and a 20% month over month increase in sales. With the use of technology, we are better able to match retailer demand to manufacturers’ supply. We track real-time sales to provide data to our manufacturers and distributors to leverage better price points for our retailers to give them wider margins on their sales.

 

When you interact with shopkeepers, what are some of their top needs in the last three months and how does that compare to pre-corona?

 

The top needs now for shopkeepers are staying in business and being able to take care of their families. A lot of people were and are still in survival mode, the shopkeepers are no different. We knew that there would be disruptions to the system which was why we developed the e-voucher scheme. It helps to connect vulnerable families with shopkeepers thereby ensuring that purchases of essential goods are still being made and they have a sustained income.

However, before the pandemic, we found that some of the top needs were to expand their presence in the community by opening more shops and increasing store capacity. Hopefully, these are plans that they will be able to revert to before the end of 2020.

 

What are some of the strategies that can be quickly deployed to ease the impact of the virus on supply chains and demand of products from a micro-level standpoint?

 

A quick and simple response during a crisis can be the most effective, by looking at the tools you have to hand to make the difference. We knew that the imposed lockdown measures due to the coronavirus would hugely impact families living in poverty where food security is an everyday concern.  Using our existing infrastructure and the network of our shop owners, we were able to quickly introduce an e-voucher scheme to distribute vouchers to families in need living in informal settlements. Families who receive SMS e-vouchers are able to redeem them at a nearby shop supplied by Sokowatch to collect essential goods, which means that food does not have to be a worry.  As a result of the scheme, we have seen that shop owners have recorded an increase in retail sales.

How critical is financial inclusion to your mission and how has this impacted your operations in different markets where fintech and mobile money have different levels of adoption? 

 

The retailers that we work with traditionally operate from hand to mouth. Few have the financial literacy and muscle to be able to pre-plan their growth. Using our financial services, we have been able to charter clearer sustainability and growth plans for the shops cushioning them not just in emergency situations but also giving them the ability to increase their order sizes and store capacity. This is critical to our mission because we grow when our shops grow. In markets where fintech and mobile money are still under development, we’ve had to find workarounds and build partnerships with other financial institutions to still be able to get the same level of service to our shops. Despite the different countries’ infrastructure developments, the mission remains the same, being the number 1 partner for retail shops. 

 

Lastly, has the pandemic opened possibilities of new opportunities for Sokowatch? What is the data telling you?

 

Yes it has. Since we launched the e-voucher scheme, weekly sales volume for the informal retailers on our platform has increased by 54% and community uptake is currently at 94%. Even after the pandemic is long gone, we are going to ensure that access to essential and non-essential goods remains a priority. We have partnered with organizations such as Uweza Foundation, World Hope in Nairobi, and the Catalyst Fund. We will continue to work with like-minded and innovative organisations in the future to bring about the much-needed change for our communities.