OmniRetail, a Nigeria-based B2B e-commerce company, has achieved profitability mainly through solid alliances with local logistics and service providers. Unlike many startups struggling to gain a foothold, OmniRetail has successfully navigated Nigeria’s intricate commercial landscape.
The company’s proficiency in partnering, coupled with their robust business model, has proved effective in comprehending and serving the local market. OmniRetail’s survival amidst a challenging environment showcases the firm’s adaptive strategies and resilience.
The last five years have seen B2B e-commerce gain significant attention, with venture capitalists investing heavily in digitalizing convenience stores and upgrading logistics practices. In 2021, investment activity increased dramatically, spurred on by a realization of the untapped potential of small and medium-sized enterprises.
The COVID-19 pandemic has, furthermore, accelerated digital transformation across various sectors, leading to a considerable increase in e-commerce growth. Such expansion enhances investment, especially in the areas of logistics and procurement, and this trend is anticipated to persist, advancing the B2B e-commerce industry and contributing widely to the global economy.
However, establishing large businesses within this sector comes with its challenges. Scarce funding, dwindling profit margins, and increasing market competition are considerable hurdles. In response to these challenges, there is a need for investment in training and workshops for team members, as well as a keen focus on customer service. It is also essential that companies stay updated with disruptive technologies like AI and blockchain.
Ismael Belkhayat, the CEO of African B2B e-commerce startup Chari, advises that startups need to carefully balance growth and profitability. Startups with detrimental contribution margins can suffer when funding markets stagnate, amplifying losses. Therefore, it is crucial to maintain a positive contribution margin.
Firms need to devise an effective strategy that digitizes store operations and enables profitable scalability, particularly challenging within an industry where gross margins generally fluctuate between 3% and 6%. Key considerations are the scale of operations, supplier relationships, and associated logistics costs. Adopting technology that automates processes, fostering strong supplier relations, and optimizing logistics operations can potentially expand the thin margin range.
OmniRetail has successfully digitized the supply chain from distributor to retailer and, among several accomplishments, has launched a product allowing retailers to order directly from manufacturers. The company is also planning to introduce OmniDeliver, a comprehensive logistics solution system, in the coming years for complete supply chain management.
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