Pricepally, a Nigerian online grocery store for fresh produce and packaged food, has raised $1.3 million seed funding, backed by Samurai Incubate; a Japanese VC that also participated in the startup’s 2021 pre-seed round, SOSV, ELEA, Hi2 Global, Chui Ventures and ex-Unilever executive David Mureithi.
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. Lawoyin (CEO) 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.”