Tushop, a Kenyan social commerce platform enabling the group buying of fast-moving consumer goods (FMCGs), is poised for expansion in Nairobi after raising $3 million in pre-seed funding in a round led by 4DX Ventures .
Founded last year by Cathy Chepkemboi, also the CEO, Tushop uses community leaders, who collect orders from their neighbors and also support last-mile deliveries.
Each community leader has a virtual store where the neighbors place their orders, which Tushop collects for bulk orders to manufacturers or other producers – such as farmers. Chepkemboi says this scheme will save shoppers up to 60% in savings, even if the agents earn sales commissions.
The startup plans to expand its operations in Kenya’s capital, Nairobi, before expanding to the rest of the country.
“We will be scaling all over Nairobi, and as it is an operationally intensive business, we have [immediately] need more warehouses and vans. We are also renting and improving our technology and our agents’ channels to make the experience even better,” Chepkemboi told thenewsupdate.
The latest round of the startup had the participation of JAM Fund, Breyer Capital, Chandaria Capital, TO Ventures, Golden Palm Investments, FirstCheck Africa and DFS Lab. Wasoko (formerly Sokowatch) also joined to make their first strategic institutional investment. A number of angel investors, including Olugbenga Agboola (GB); Flutterwave CEO, Raja Kaul; Sundial Group President, Eli Pollak; CEO of Apollo Agriculture and Ida Mannoh; Chipper Cash, director of growth, also participated in the round.
“We think the market opportunity for Tushop is incredible, and Cathy is the right founder to go for it, given her deep understanding of the market and impressive execution and growth to date. We are delighted to join such a strong team of other investors and advisors to help Tushop become the dominant player in group buying across Africa,” said 4DX Ventures, managing partner Peter Orth.
Experience in the FMCG industry
Chepkemboi launched Tushop after leaving Unilever [Kenya and UK], and Moko, a furniture startup in Kenya. She says that during her tenure at Unilever – Kenya, she recognized the fragmentation in Kenya’s retail sector, adding that logistics was one of the challenges leading to the high cost of essential goods in the country. In Kenya, distributors who buy from manufacturers generally set the price of goods, which, however, is often inflated by the distributors and retailers.
“I was in the field distributing products and could see what was happening in the field…I could also immediately see that if we were in direct contact with the customer, the costs would be lower and we could be more focused promotions or marketing. This led to what we do now, buying from manufacturers and selling directly to consumers,” said Chepkemboi, who studied international relations at the University of Pennsylvania.
“We provide predictive delivery of affordable high-quality goods, including fresh produce. And the way we can do this is by partnering with community leaders, collecting orders from neighbors and arranging last mile delivery. Our value proposition here is to give our customers a way to shop cheaper and easier, we are cheaper than retail,” she says.
Tushop joins the growing list of startups digitizing Kenya’s retail sector. They include Marketforce, whose RejaReja app makes it possible for casual traders to order and pay for inventory digitally. Wasoko, also in the same space as RejaReja, operates by distributing FMCG from suppliers to retailers. The difference between the two is that unlike Wasoko, RejaReja is an asset-light distribution platform – it does not own capital assets such as warehouses and vans; these are provided by its partners, including manufacturers and distributors. Tushop is one of the first social commerce platforms in the Kenyan space to source goods, including fresh produce, directly from producers and deliver them to shoppers.