Nigeria and Africa’s food sector is heavily fragmented, making it arduous for restaurants and other food service businesses in its hospitality sector to access the supplies they need in a timely and efficient manner. This fragmentation results in overstocking or understocking of products, as well as delays in getting products to their intended destination, which are all bad for business growth.
Vendease, an agritech startup, has come to the rescue through its online marketplace that lets restaurants in Africa purchase supplies directly from farms and food manufacturers. So instead of going through expensive – middlemen – vendors or wasting productive hours sending staff to open markets with volatile prices, restaurants make an order on the platform with a click and get all their food supplies within 24hrs. Founded by Tunde Kara, Olumide Fayankin, Gatumi Aliyu and Wale Oyepeju in 2020, the startup offers cross-sectoral services including, logistics, storage, payments, inventory management etcetera. With its latest $30 million funding, the startup has scaled its operations in Africa.
In this interview with Ventures Africa, Tunde Kara talks about Vendease’s business operations, challenges in the market and plans for expansion.
What inspired you to start Vendease?
My co-founder, Olumide, and I have worked on both sides of the market before we delved into it. I grew up on a farm and was used to raising livestock and planting crops. So some of the problems we are solving today are from my experience. On the other side of the market, Olumide, my co-founder, and his parents still run hotels in the hometown of Akure. He worked with them just before he went for his Masters in Aberdeen. So we understand these problems from an innate point of view, even though that was not what ticked us off to start.
Because we like food, we patronise a lot of restaurants. At some point, we started noticing that restaurants we patronise were experiencing a decline in their services. One thing that helped us understand how big the problem was that places, where I used to lead teams across different African cities, had similar challenges. So when I travel and repay these restaurants a visit, they would have downsized or shut down. The problems we experienced in Lagos were similar to what we saw in different cities. Since we were used to starting a business together, we decided and deemed it fit to solve this problem at scale. Afterwards, we then put together a thesis and secured funding to kickstart operations.
Kindly explain Vendease’s operation.
Although it is a bit complex, everything we built is to ensure that food flows from the point of production to consumption. We launched our e-procurement platform first, which is like a marketplace where restaurants buy directly from farmers and manufacturers. It has since evolved down to other products.
The user places an order on the platform, and the management system detects who amongst our suppliers can supply this product quickly. There is a ranking feature on the platform that determines who the best supplier for the product ordered is. The supplier then moves to our warehouse depending on how fast the delivery is needed. All these processes typically happen within 12 hours from ordering to receiving it.
For others, we use data to predict what type of product users will need. For instance, if we have worked with restaurant X for two years, and we know they order 20 kilograms of beef on Tuesdays, we make sure that quantity is available in a fulfilment centre around restaurant X. So by the time they place an order or get a prompt from the platform the beef is already around them.
How does the inventory management system work?
The inventory management system (IMS) solves a data problem for our users. At a time, many businesses were not intelligent about what they had in stock, and they were either overbuying or underbuying resulting in wastage. But with the IMS, you can track to a level what you need in your organisation.
With an inventory management system, we can track how food moves from the point of production – farmers and manufacturers, to consumption. This makes our clients make intelligent business decisions on when to buy and when to sell. We have our point of purchase that helps businesses know how food leaves the organisation, from the store to the kitchen and the table where it is sold. This also helps Vendease make intelligent decisions on how much credit to give to business owners based on their buying power. So it is a whole ecosystem that makes businesses more successful.
The BNPL offer solves the cash problems for our clients, so instead of having to pay upfront or on delivery, they can typically get products if they meet our creditworthiness test. They can then pay within a period depending on the kind of business.
In what ways does Vendease deal with economic issues like food inflation?
Our database helps us a lot with this. Since we can’t prevent macroeconomic problems like inflation, we protect businesses on our platform as much as we can from the effects of those things. We have been operational for over three years, so we have gathered a lot of data, interpreted it and used it to make wise business decisions for our clients. We can predict to an extent when and where prices of goods are going up.
When prices are spiking because of unprecedented occurrences like the Russia-Ukraine war, we either advise our users to stock up on certain things or stock up on their behalf. So when other business owners are buying at an expensive rate, our users enjoy the usual rate for up to 3-4 weeks. This is financially wise as they do not have to spend as much as their counterpart.
During the ember month, prices of products skyrocketed. However, a typical Vendease user did not feel this because we stock up on them before then. In the ember months, people sometimes buy a product for 100X its usual price. Using our platform helps business owners prevent this and make more money because they can sell the product for a higher price.
We have dry and cold storage facilities to help preserve our stocks, but we have power problems. Because we have been sustainability conscious since inception, we use a mix of solar and inverter to power our cold rooms and warehouses. This reduces our dependence on the national electrical grid. The problems persist, but we deal with them better and sustainably.
What are some challenges you face in your operations?
Generally, running a business in Africa is arduous because while solving people’s problems, you are constantly solving yours too. First, infrastructural problems like irregular power supply, storage, and bad road networks are still some challenges we face. For poor road networks, we have been able to use data to mitigate its effect. Since we have data on peak days for some orders, we plan our distribution ahead of delivery time, eliminating a logistics hurdle like traffic. The data we have helps us plan our fulfilment facilities around areas with high demand and make the delivery time shorter.
Working capital and human capital issues also exist, and we have our unique ways of solving them.
How has funding helped your growth?
As a startup, capital is necessary to push some ideas into the market faster and test your ideas quicker. In fundraising, the idea funded must be standard, so you are not just pouring water down the drain. You need a scalable idea which can become a profitable business. That is what funding is helping us do. We are scaling rapidly, hiring the best talents, and building new products. We are now in two countries and will be in two more before the end of the year.
What are your plans for expansion?
We just launched a series of products into the market that are at the beta stage. In the next 6-8 months, we will launch them publicly. For expansion, our focus is on the current markets we are in. As we grow our base and capacity, we can consider moving to other markets. We have this in our plans, but our focus is consolidating ourselves in our present market.
We have a presence in two African countries – Nigeria and Ghana, with offices across 16 cities. At the moment, over 3,000 business users are on our platform. We have more than 50 X our revenue from when we started and have about 300 staff from 4 co-founders. It has been an interesting three years ride.