Kenyan B2C e-commerce company which serves Africa’s middle- and low-income African consumers Copia Global just scored $50 million in a Series C equity round backed by Goodwell Investments.
The latest financing round saw the participation of new investors such as Zebu Investment Partners, Koa Labs, and the U.S. International Development Finance Corporation (DFC) coupled with old investors Perivoli Innovations, Lightrock, and German development finance institution DEG.
It’s also worth noting that the new round comes three years after the company’s Series B round of $26 million, which according to a source familiar with the matter, the e-commerce company has raised $53 million. However, merging its Series C brings the company total fundraise since inception in 2013 now stands at $103 million.
Meanwhile, the subject company was founded in Kenya by ‘Jonathan Lewis’ and ‘Tracey Turner’ as a B2C e-commerce platform designed to serve Africa’s aforementioned category of consumers.
In view of this development, the company made clear in a statement that it harnesses mobile technologies, a network of local agents, and proprietary Copia Logistics to reach a market that has proven difficult for traditional retail and Western e-commerce models.
According to the IMF, it is believed that consumer spending in the continent of Africa is projected to reach over $2 trillion in the next three years. This is because the continent’s middle class is no other but the primary driver of this growth. Yet, their shopping needs are not adequately served owing to the fact that high logistics costs make Western-style e-commerce companies like Jumia which went public operate unprofitably. Consequently, the African e-commerce giant is reportedly faced with the downside, based on the fact that it has not turned a profit since going public as its losses continue to increase.
Copia Global, on the other hand, operates a profitable business due to how it approaches the market. This is because the subject e-commerce company focuses on customers in rural areas that struggle to access the same goods and services based on choice, price value, and reliability that similar consumers of higher income levels or in urban areas can access.
Although this target market could prove difficult to locate coupled with the fact that individuals may have smaller wallet sizes, and their number – which Copia claims is in the regions of 750 million people across Africa – this presents an opportunity through collective purchasing power, more significantly when a company is hyperlocal driven.
“The whole premise of Copia was to find a solution that was sustainable and profitable to serve consumers that we could improve their quality of life and that of their families”, Copia’s CEO ‘Tim Steel’ said.
To ensure it remains resilient as the company builds a sustainable business that involves a three-dimensional relationship that cuts across customers and 30,000 agents in different communities, it is poised to deliver in two major markets – Kenya and Uganda where it has a huge presence.
Typically, low-income customers in Africa would often prefer to get across to a physical store in order to get what they want irrespective of the distance, which often disrupts e-commerce platforms. To this end, it became necessary to deploy a strategy, which Copia being poised to deliver recruits small business owners that have established some level of familiarity and trust with customers and train them to become agents. And so, they wear branded Copia uniforms and advertise the company’s platform to each customer within their communities, eventually getting them to make their first transaction on an e-commerce store.
Currently, the subject e-commerce value proposition is viewed to be solid with goods not generally accessible in proximity to the average consumer, according to the CEO. Notably, goods like medicine and building materials will require customers to travel to the nearest city or send someone they trust to get. For instance, with Copia Global, 20 customers within a specific location can make several orders, and Copia will deliver them to its agents, whose stores and shops are close to customers in that location. With this, customers can pick up their orders when they’re ready to. Further on this, the company says it also facilitates deliveries to customers’ homes upon request.
Relating logistics costs compared to others, Steel said: “This helps to create the viability of the model from a cost and unit economics perspective. But it also means that we don’t suffer the same issues many e-commerce companies face where deliveries fail because the receiver is not available at the location. Our agents are always there because they’re running their businesses”.
As for the new fund, the company plans to use the Series C funding to grow its model across East Africa, notably Kenya, Tanzania, and Rwanda. While in Kenya, the CEO believes Copia can access 80% of its serviceable market over the next couple of years, up from the present 50%.
Moreover, the company is also eyeing other markets, which is dependent on a number of factors. But if all goes well, it might expand into Nigeria, South Africa, Ghana, Cote d’Ivoire, Mozambique, Zambia, and Malawi.
“Copia e-commerce model is built for the unique requirements of the African market and will save many Africans a lot of time and money. We see it as one of the next big leapfrogging technologies; just like mobile phones leapfrogging landlines and solar power leapfrogged the grid, Copia is leapfrogging retail”, the managing partner at Goodwell Investments ‘Els Boerhof’ said in a statement.
- What’s your view?