The food sector in Nigeria and Africa is highly fragmented, making it difficult for restaurants and other hospitality food service companies to access the supplies they need in a timely and efficient manner. This fragmentation results in over- or understocking of products, as well as delays in shipping products to their intended destination, all of which are detrimental to business growth.
Vendee, an agritech startup, has come to the rescue through its online marketplace where restaurants in Africa can purchase supplies directly from farms and food manufacturers. So instead of going through expensive brokers or wasting productive hours sending staff to open markets with volatile prices, restaurants place an order on the platform with a click and get all their food supplies within 24 hours. Founded by Tunde Kara, Olumide Fayankin, Gatumi Aliyu And Wale Oyepeju in 2020, the startup will provide cross-industry services including logistics, warehousing, payments, inventory management, and so on. With the latest funding of $30 million, the startup has scaled up its operations in Africa.
In this interview with Ventures Africa, Tunde Kara talks about Vendease’s business, challenges in the market and expansion plans.
What inspired you to start Vendease?
My co-founder, Olumide, and I worked on both sides of the market before diving into it. I grew up on a farm and was used to raising cattle and planting crops. So some of the problems we solve today come from my experience. On the other side of the market, Olumide, my co-founder, and his parents still run hotels in Akure’s hometown. He worked with them just before going for his Masters in Aberdeen. So we understand these issues from an innate point of view, even if that wasn’t what prompted us to start.
Since we love food, we patronize many restaurants. At some point, we started noticing that restaurants we visit experienced a decline in their services. One thing that helped us understand how big the problem was was that places, where I led teams in different African cities, had similar challenges. So when I travel and visit these restaurants they would have downsized or closed. The problems we experienced in Lagos were similar to what we saw in several cities. As we were used to starting a business together, we decided and thought it appropriate to solve this problem on a large scale. Then we drafted a dissertation and secured funding to jump-start operations.
Please explain how Vendease works.
While it’s a bit complicated, everything we’ve built is to make sure food flows from the point of production to consumption. We first launched our e-procurement platform, which is a kind of marketplace where restaurants buy directly from farmers and manufacturers. Since then it has evolved into other products.
The user places an order on the platform and the management system detects which of our suppliers can deliver this product quickly. There is a ranking feature on the platform that determines who is the best supplier for the product ordered. The supplier then goes to our warehouse, depending on how fast delivery is needed. All these processes typically take place within 12 hours from order to receipt. That is the typical process for some products.
For others, we use data to predict what type of product users need. For example, if we’ve worked with restaurant X for two years and we know they’re ordering 20 pounds of beef on Tuesday, we’ll make sure that quantity is available in a fulfillment center around restaurant X. So by the time they place an order or get a prompt from the platform that the flesh is already around them.
The founding team of Vendease.
How does the inventory management system work?
The inventory management system (IMS) solves a data problem for our users. At the time, many companies were not intelligent about what they had in stock, and they bought too much or too little, resulting in waste. But with the IMS you can track down to a level what you need in your organization.
An inventory management system allows us to track how food moves from the point of production – farmers and manufacturers, to consumption. This ensures our customers make intelligent business decisions about when to buy and when to sell. We have our point of purchase that helps businesses know how food leaves the organization, from the store to the kitchen and the table where it is sold. This also helps Vendease make intelligent decisions about how much credit to give to business owners based on their purchasing power. So it’s a whole ecosystem that makes companies more successful.
The BNPL offer solves the cash issues for our customers, so instead of having to pay in advance or on delivery, they can usually get products if they pass our creditworthiness test. They can then pay within a period, depending on the type of company.
In what ways does Vendease deal with economic issues such as food inflation?
Our database helps us enormously with this. Since we cannot prevent macroeconomic problems such as inflation, we protect companies on our platform from the consequences of those things as much as possible. We’ve been operational for over three years, so we’ve collected, interpreted and used a lot of data to make wise business decisions for our clients. We can predict to some extent when and where the prices of goods will rise.
When prices rise due to unprecedented events such as the war between Russia and Ukraine, we advise our users to stock up on certain things or to stock up on their behalf. So when other business owners buy at an expensive rate, our users enjoy the usual rate for up to 3-4 weeks. This makes financial sense as they don’t have to spend as much as their counterpart.
During the ember month, product prices skyrocketed. However, a typical Vendease user didn’t feel this because we stocked them before then. In the ember months, people sometimes buy a product for 100x the usual price. By using our platform, business owners can avoid this and earn more money as they can sell the product for a higher price.
We have dry and cold storage facilities to maintain our supplies, but we are having power issues. Since we have been conscious of sustainability from the start, we use a mix of solar energy and inverter to power our cold stores and warehouses. This reduces our dependence on the national electricity grid. The problems remain, but we are dealing with them better and more sustainably.
What are some challenges you face in your operations?
In general, running a business in Africa is tough because while you are solving people’s problems, you are also constantly solving yours. Firstly, infrastructural issues such as erratic power supply, storage and poor road networks are still some of the challenges we face. For poor road networks, we have been able to use data to mitigate the effect. Since we have data on peak days for some orders, we plan our distribution ahead of delivery time, eliminating a logistical hurdle such as traffic congestion. The data we have helps us plan our fulfillment facilities around areas of high demand and shorten delivery times.
There are also working capital and human capital issues, and we have our unique ways of solving them.
How has financing helped your growth?
As a startup, you need capital to push some ideas to market faster and test your ideas faster. In fundraising, the idea funded should be standard, so you don’t just pour water down the drain. You need a scalable idea that can become a profitable business. That is where financing helps us. We scale quickly, hire the best talent and build new products. We are now in two countries and will be in two more before the end of the year.
What are your expansion plans?
We’ve just launched a range of products that are in beta. We will launch them publicly in the next 6-8 months. For expansion, our focus is on the current markets in which we operate. As we increase our base and capacity, we may consider moving to other markets. We have this in our plans, but our focus is on consolidating ourselves in our current market.
We are present in two African countries – Nigeria and Ghana, with offices in 16 cities. At the moment there are more than 3,000 business users on our platform. We have more than 50 times our revenue from when we started and have about 300 employees from 4 co-founders. It’s been an interesting three-year ride.
