Today, Cartona announces that it has raised a $ 4.5 million pre-Series A funding round to connect retailers and manufacturers through an app.
It is looking to take a big part in the budding game of e-commerce and retail, where several startups in Egypt are doing their part, including Capiter, also a one-year-old startup that we talked about last week.
The company confirmed that Dubai-based venture capital firm Global Ventures led the round, with pan-African firm Kepple Africa, T5 Capital and angel investors participating..
Cairo-based Cartona, founded in August 2020, focuses on solving the supply chain and operational issues of players in the Fast-Moving Consumer Goods (FMCG) industry by helping buyers access products from sellers on a single platform..
Buyers, in this case, are retailers, while sellers are FMCG companies, distributors and wholesalers.
The problem facing retailers in Egypt and most African countries is mainly limited access to suppliers. There are also issues of market price transparency, which depend on traditional logistics capabilities.
For vendors, the lack of data and the inability to make data-driven decisions to improve margins and drive growth add to unoptimized warehouses.
“The commercial market is completely inefficient and it’s not good for the supplier or the manufacturers, and it’s definitely not good for the retailers,” CEO Mahmoud Talaat told TechCrunch in an interview.. “So we got the idea of Cartona, which is essentially a fully lightweight asset model that connects manufacturers and wholesalers to retailers. “
Talaat founded the company alongside Mahmoud Abdel-Fattah. Prior to Cartona, Talaat founded Speakol, a MENA-focused adtech platform serving 60 million monthly users and was the commercial director of agricultural company Lamar Egypt..
Cartona operates as a lightweight marketplace. On the platform, food retailers can secure orders from an organized network of vendors. The company says that this way it can provide visibility through real-time price comparisons and clarity on delivery times.
Additionally, FMCGs and vendors can optimize their go-to-market execution through the use of data and analytics. Cartona completes it all by providing integrated financing and access to credit to retailers and suppliers.
Cartona earns money through all of these processes. It charges a commission on orders placed, charges vendors for serving merchant ads (since they compete for merchant attention), and provides market insight on buyer behavior, competition on marketers. price and market share..
“It’s time to capitalize on technology beyond warehouses and trucks. Data and technology will transform traditional retail into digitally native commerce, which in turn will dramatically improve supply chain efficiency, ”said Abdel-Fattah of how the company sells products. information to retailers and suppliers.
Cartona has more than 30,000 merchants on its platform. Together, they have fulfilled over 400,000 orders with an annualized gross merchandise value of EGP 1 billion (~ $ 64 million). Cartona also works with more than 1,000 distributors, wholesalers and 100 FMCG companies, providing consumers with more than 10,000 products, including dry, fresh and frozen foods..
The company’s business and revenue model is similar to other companies in this space, but the main difference is whether or not they own assets.
Looking at the players in Egypt, for example, MaxAB operates its warehouses and fleets; Capiter uses a hybrid model in which it leases these assets and holds inventory when dealing with high-turnover products. But Cartona uniquely manages an asset-light model.
The CEO tells me he thinks this model works best for all stakeholders involved in the retail market. He argues that not owning assets and leasing those on the ground shows that the company is trying to improve the operations of existing suppliers and traders instead of moving them.
“I believe that the infrastructure already exists. We already have many warehouses, many small and medium entrepreneurs, and wholesalers and distributors and companies that have a lot of strengths. If you want to solve the problem, we think we must allow people who are strategically located in small streets all over Egypt and have the infrastructure but lack the technology to optimize their warehouses and trolleys. “
The current margins of suppliers with warehouses are slim and Cartona provides the technology – an inventory and ordering system – to keep its supply chain efficient.
The general partner of lead investor Global Ventures, Basil Moftah, said in a statement that Cartona’s technology and not owning inventory were critical in the firm’s decision to back the company. business..
“The commercial market is one of the most sophisticated, but [it is] characterized by various critical inefficiencies along the value chain, ”he said. “Cartona’s light asset approach tackles these inefficiencies by optimizing the business process in a unique way and with minimal capital spent.
The proceeds from the investment are focused on improving this technology, Talaat said. Besides, Cartona is expanding its team and operations beyond two cities in Egypt – Cairo and Alexandria – to other regions.
Longer-term plan could include horizontal and vertical product expansion in the pharmaceutical, electronics and fashion industries.