Year-old startup Capiter announced last week that it has raised a $33 million Series A to digitize Egypt’s traditional offline retail market..
It is looking to take a bigger pie in the budding e-commerce and retail play, where several startups are gaining weight, including Also a year old startup based out of Cartona, Egypt.
Today, Cartona is announcing that it has raised a $4.5 million pre-Series A funding round to connect retailers and manufacturers through an application.
The company confirmed that Dubai-based venture capital firm Global Ventures led the round, with pan-African firm Keppel Africa, T5 Capital and angel investors also participating..
Cairo-based Cartona, founded in August 2020, is focused on solving the supply-chain and operational challenges of players in the fast-moving consumer goods (FMCG) industry by helping buyers access sellers’ products on a single platform..
Buyers, in this case, are retailers, while sellers are FMCG companies, distributors and wholesalers.
Retailers’ problems in Egypt and most of Africa mainly revolve around limited access to suppliers. There are also issues of transparency in market prices, which rely on traditional logistics capabilities.
For suppliers, non-optimized warehouses add to the lack of data and the inability to make data-backed decisions to improve margins and aid in growth.
“The business market is completely inefficient and it is not good for the supplier or the manufacturers, and it is certainly not good for the retailers,” CEO Mahmood Talat said in an interview.. “So we came up with the idea of Cartona, which is basically a Completely Light-asset model that connects manufacturers and wholesalers to retailers“
Talat founded the company with Mahmud Abdel-Fatah. Prior to Cartona, Abdel-Fatah founded Specol, a MENA-focused edtech platform serving 60 million monthly users, while Talat was chief commercial officer of agricultural company Lamar Egypt..
Cartona operates as an asset-light marketplace. On the platform, kirana retailers can get orders from a curated network of vendors. The company says that this way, it can provide visibility through real-time price comparisons and clarity on time of delivery.
Additionally, FMCGs and suppliers can optimize their market-going performance through the use of data and analytics. Cartona tops this by giving retailers and suppliers access to embedded finance and credit.
Cartona makes money through all these processes. It charges a commission on orders placed, charges suppliers to traders to run ads (as they compete for the latter’s attention), and provides market insights on buyer behavior, price competition, and market share..
“It is time to capitalize on technology beyond warehouses and trucks. Data and technology will fundamentally replace traditional retail, which in turn will significantly improve supply chain efficiency,” said Abdel-Fatah, on how the company sells information to retailers and suppliers.
Cartona has more than 30,000 merchants on its platform. Together, they have processed over 400,000 orders with an annual gross trading value of EGP 1 billion (~$64 million). Cartona also works with over 1,000 distributors, wholesalers and 100 FMCG companies, offering consumers over 10,000 products including dry, fresh and frozen food..
The business and revenue model of the company is similar to other companies in this area, but tThat main difference is whether they own the property or not.
For example, taking a look at the players in Egypt, MaxAB operates its warehouses and fleet; Capiter uses a hybrid model in which it rents out these assets and owns the inventory while dealing with high-turnover products.. but cartona Lonely Manages the asset-light model.
The CEO told me he thinks this model works best for all stakeholders involved in the retail market. They argue that not owning the property and leasing the land shows that the company is trying to improve its operations. existing Instead of displacing suppliers and traders.
“i believe that the infrastructure already exists. We already have many warehouses, many small and medium-sized entrepreneurs, and wholesalers and distributors and companies with lots of assets.. If you want to fix the problem, we think those who are should enable strategic Small roads and infrastructure are located throughout Egypt but they do not have the necessary technology to optimize their warehouses and carts“
Current margins are lower for warehoused suppliers, and Cartona provides the technology — an inventory and ordering system — to drive efficiencies across its supply chain.
Not owning Cartona’s technology and inventory proved important in the firm’s decision to back the company, Basil Mofftah, general partner at major investor Global Ventures, said in a statement..
“The business market is one of the most sophisticated, yet” [it is] painted by Diverse Significant inefficiencies in the value chain,” he said. “Cartona’s asset-light approach tackles those inefficiencies by optimizing the business process in unique ways with minimal capital expenditure. “
Talat said the investment proceeds are focused on improving this technology. with thisCartona is expanding its team and operations from two Egyptian cities – Cairo and Alexandria – to other parts.
Long-term plan may include horizontal and vertical product expansion in pharmaceuticals, electronics and fashion.