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Following the new funding, the startup joins a handful of
African food e-commerce startups, including South Africa’s Yebo Fresh and
Morocco’s Terraa, that have raised funding this year, as venture capitalists
continue to scale back their operations.
Pricepally says it will use the funding to expand beyond the
three cities it currently serves in Nigeria and to re-introduce group buying to
keep up with its promise of enabling consumers to buy food affordably. The
startup facilitates same- or next-day delivery of the produce ordered through
its digital channels, including the app and WhatsApp chatbot. It has a network
of fulfillment centers within the three cities it currently operates in but
outsources delivery services.
Luther Lawoyin (CEO), Deepak Bansal (CTO), Mosun Lawoyin
(CXO) and Jummai Abalaka (COO) launched Pricepally in 2019 to reduce the cost
of food, ensure availability and keep prices predictable amid shortages and
mounting prices exacerbated by rising inflation.
The startup says it sources fresh produce directly from
farmers, some of whom it has contracted, and packaged food from manufacturers.
Luther Lawoyin told TechCrunch the prices of the produce are often negotiated,
which, coupled with the short food supply chains, ensures that the cost of its
supplies are affordable.
“We have more control over quality and supply because we
have specific farmers supplying specific products. We also carry out price
research across local markets and our prices are a lot fairer and that’s just
because we’ve taken out several layers of middlemen. The idea now going forward
is for us to capitalize on our sourcing strength to solve one of Nigeria’s
biggest problems currently, which is food insecurity,” said Lawoyin.
“In many ways we are more than just selling products. We are
bringing transparency and visibility into the market.”
Lawoyin lists transparency among the major contributors of
Pricepally’s steady growth of customer accounts and its high customer
retention. Its existing buyers account for more than 80% of its revenues: a
testament to the validity of its value proposition.
The startup mainly targets retail buyers, who make up 70% of
its customers because, unlike businesses, they pay upfront, are cheaper to
acquire and margins are higher, said Lawoyin.
The startup anticipates that the re-introduction of online
group buying, which will enable even more retail customers to come together to
unlock wholesale prices, will help accelerate its growth as food prices
continue to bite. Besides, it is also looking to unlock new customers through
April, its newly launched WhatsApp chatbot that targets the mass market in
Nigeria, one of the countries with the highest WhatsApp usage globally.
Commenting on the deal, Rena Yoneyama of Samurai Incubate
told TechCrunch: ”The great thing about Pricepally is their execution ability.
There are still many difficulties with e-commerce in Nigeria, and many things
that work normally in other major African cities often do not work due to a
lack of both hard and soft infrastructure and trust issues.”
“However, Pricepally has worked hard to improve the quality
of service, increase customer satisfaction, earn the trust of customers, and
has built up a very high percentage of repeat customers. Their healthy unit
economics and continuous business growth proves that.”