Sumundi

Retailers in Africa face severe challenges such as inadequate logistics, inventory losses, disintegrated supply chains, stock-outs, and financial illiteracy. All of which contribute to higher costs pushing them to operate in the informal economy and remain non-scalable, further hindering the productivity of firms and the overall economy, given that 90% of retailers operate informally.

To address this problem, we leveraged technology to build an integrated solution for micro, small and medium enterprises (MSMEs) in Ghana allowing them to manage their bookkeeping, inventory and distribution.

Despite the challenges, MSMEs in Africa are very resilient as they still forge to build strong businesses to provide for themselves, their families and serve the needs of their communities.

We believe by growing our capacity, we will serve a larger share of African retailers to better manage their stores, ultimately, paving their way to growth, job creation, formalization, and serving communities.

MSMEs are the backbone of many countries across Africa, contributing to an estimated 25% of national economies and 60% of the employment generation. However, many of them are either losing business because of lack of proper management practices or are grappling with finding an innovative approach to general management practices to address the ever changing consumer behavior.

It is estimated that 60% of micro-enterprises in Africa do not use any formal accounting practices. In Ghana alone there are close to 700,000 MSMEs without organized management practices. In most scenarios, the enterprise accounting role has been limited to laborious data capture and irregular meetings between the salesperson and business owner. While MSMEs do practise bookkeeping, they do not complete the bookkeeping cycle due to low levels of education, insufficient financial literacy and attempts of embezzlement, resulting in incomplete bookkeeping records. Worryingly, most micro-entrepreneurs' decision making is based on maintained financial records. This translates to unsustainable poor decision-making emanating from incomplete bookkeeping records which can result in business failure. Additionally, micro-enterprises face the challenge to streamline their supply chain as a result of mismanagement of inventory tracking and therefore tend to incur inventory losses, resulting in interrupted supplies and unsustainable distribution.

Sumundi’s solution is to equip MSMEs with forecast-led technologies and tools to move away from traditional operational management to demand-driven decisions, allowing them to be more predictive than reactive when meeting customer demand, and to respond swiftly to the rise in operational complexity and financial pressures.

A software -which works both online and offline- helps retailers digitize key portions of the business processes such as inventory management, sales and record keeping, getting business insights and managing their customers.

We train and assist merchants to install the software and input their data. From there, anytime a customer walks into the merchant’s shop to make a purchase, the merchant records the sale into the software, a receipt is generated, and the corresponding adjustments are automatically made to the merchant’s inventory. The merchant gets to see the sales he is making and how much is being sold in real-time.

Our software is directly integrated with our proprietary peer to peer delivery platform. Meaning, retailers can have access to numerous dispatch resources for delivering items to their customers even when they do not own any vehicles. Enabling them to go beyond tracking what goes outside of the shop to handing products to customers conveniently.

Sumundi serves micro-enterprises in Ghana who then serve high dense locations where high traffic consumers and fast growing communities move. Our target market are retailers with a minimum capital of $1000 and a maximum capital of $5,000,000. There are approximately 2,000,000 retailers, out of which 90% of them employ 5-10 people per store. Due to the nature of their primitive management practices they are hardly profitable and tend to operate in the informal economy.

We believe our solution renders enterprises efficient and productive as a result of digitizing their operations and optimizing their distribution. Our solution allows enterprises save inventory tracking time from 6 days to 1 day a month, enhance accountability between business owners and salespeople due to bookkeeping credibility, improve logistics delivery by reaching out to more consumers, optimize marketing plans by leveraging on real-time data, cut unnecessary costs such as inventory loss and ultimately improve their profitability prospects.

Such productivity gains powered by efficiency innovations have shown to unlock stronger streams of income that millions of people depend on. The success of MSMEs can be linked to economic growth and poverty eradication through self-employment, job creation, wealth creation and promotion of the general welfare of communities.

There is a strong case that Africa can leapfrog progress with technology. E-commerce alone can create an enabling environment for merchants to scale their businesses. However, there remain structural challenges to be addressed to unlock full potential. Empowering small businesses to digitize and hence optimize their bookkeeping and supply chain is a stepping stone to realize the potential of the retail sector to sustain household incomes, create jobs and serve the needs of communities in line with urbanization and population growth trends.

Not all technologies that worked elsewhere can be applied in African markets. Therefore, our innovation goes beyond tech to address the local context: how do we empower MSMEs by using technology when they do not have access to the internet or exert low levels of education to adapt such solutions?

First, we are able to integrate solutions for small retail shops which are available online and offline. Moreover, unlike our key competitor KudiGo, we take a hands-on approach when serving our customers.

We are committed to address and understand the pain points micro-enterprises go through. We make sure to support customers through the hardest parts of going digital such as with time consuming data entry, stock taking and support in acquiring appropriate hardware where necessary by negotiating with hardware suppliers on their behalf for no additional cost. No one on the market does this.

Furthermore, by adopting our solution, customers immediately have the ability to serve their customers beyond their physical location by leveraging on our delivery network with zero startup cost. This is a life saver for small scale retailers who can’t afford the huge cost of acquiring their own in-house logistics.

We developed a proprietary, simple peer-to-peer technology that powers our delivery network by combining existing frameworks and packages. This has allowed us to tightly integrate our core products. Customers on our platform can basically perform two crucial tasks from a single point; Management of their inventory and sales + Delivering to their customers.  Essentially, allowing us to properly standardize and improve the purchasing process and getting the product to the doorstep of the customer.

Our KeepSales product is proven and already been installed by 42 enterprises in Accra, Ghana with a retention rate of 80%. Additionally, under the Cliqrun product, we have 15 customers as active enterprises leveraging our dispatch partners for their delivery services.

It is a common practice that many businesses fail due to the lack in management pracitces such as bookkeeping and inventory tracking.

Evidence from an Analysis of Bookkeeping Practises of Micro-Entrepreneurs in the Retail Clothing Industry in Cape Town, South Africa, shows that most micro-entrepreneurs do practise bookkeeping manually, but do not complete the bookkeeping cycle. Worryingly, was that was that most micro-entrepreneurs indicated that decision making is based on maintained financial records. We also recongise this in Ghana, that the operator of micro-enterprises possess limited formal education, weak managerial and financial management skills within the sector according to a study on management practices of small firms in Ghana. They also lack qualified accounting staff and suitable accounting software which are motivators to effective working capital management practices. Owners/managers were found to act as barriers to efficient usage of working capital management practices.

Our theory is thus simple: By helping store owners digitize their operations, they will become more efficient and able to understand their business better, leading to informed decision-making and ultimately business sustainability. Catalyzing such an outcome has a positive impact on local communities and the overall economic growth of the country.

The retail sector employs close to 40% of the population of the country. In a developing economy like Ghana, the contribution of small firms to the employment is relevant. Because economic opportunities are limited as reflected in the unemployment rate of 6.8%, many people revert to self-employment. That said, small scale businesses play a pivotal role in the development of the economy of developing countries in terms of generation of employment opportunities, utilization of locally endowed resources, generation of revenue for the government through tax, re-distribution of income thereby contributing to poverty reduction.

The African retail market is worth over $1 Trillion and we have a potential addressable market of $800 billion across Sub-Saharan Africa. With an initial focus on Ghana’s approximately 2,000,000 retailers out of which 700,000 without bookkeeping practices, we are working to capture 1000 retailers of the market by 2025. So far, and since inception in July 2018, Sumundi’s solution has been adopted by 42 small businesses. With an approximate number of 5 employees per store, our solution is streamlining the operations of small businesses for 210 employees. We are pushing for a strong client acquisition campaign targeting 150 MSMEs by Q1 2021. Over the next five years under the right circumstances, a stronger sales team and a diversified product offering our target is to serve 1000 MSMEs.

In the short-term we will continue to serve existing customers and increase our presence in Ghana. Our goal is to enhance our business model stickiness by onboarding 150 businesses using the KeepSales product. Ultimately, with more businesses on-boarded we expect the delivery business to surge rendering our business scalable. By contrast, further integration of the delivery business will also be a source of income for logistic companies and their drivers, further amplifying our impact by empowering businesses across the value chain.

In the medium-long term, we have plans to increase our service offering so that we can unlock further opportunities for small businesses beyond bookkeeping and supply chain management. Notably, we plan to integrate business development and access to credit to improve the business environment of enterprises, allowing them to become scalable businesses and eventually improve the quality of their employees and families. Doing so, can help Sumundi position itself as a fully fledged accelerator for MSMEs which will translate into further traction, attracting more MSMEs. Moreover, by unlocking opportunities for small businesses job creation and quality jobs will improve. Overall, there is growing evidence that by improving the benefits to costs ratio, small businesses will experience formalization contributing to enhanced state revenues and overall economic growth.

After two years in operation, we have observed the following barriers to our business and narrowed them down into four big challenges:

1. Financial: Access to credit for MSMEs is constrained by high cost of borrowing of double digit interest rate. This reduces the prospect of growth for enterprises who we can target.

2. Cultural: MSME owners exert weak management practices due to low levels of education.

3. Infrastructure: Access to internet and hardware (i.e. a PC) is limited which restraints software management tools from adoption. Internet penetration is very low at 14%, whereas close to 80% of our clients did not have or know how to use a PC or a laptop.

4. Human resources: Talent is still a major barrier for our services to be widely adopted. Similar to enterprise owners, it is challenging for us to onboard delivery partners without running workshops or training sessions on technology use and business operations.

Such barriers are considered structural and continue to persist in most African countries. In the long-term such barriers will remain relevant, however, regulation can pose a barrier to the development of the retail industry as the government tends to favour foirgen direct investments into large retail chains which can jeopardize the development of the informal retail sector.

Generally, we aim to enhance our stakeholder network by reaching out to more partners along the retail value chain (in logistics, finance, supply chain, education and business development) to provide our customers with a well-rounded 360 business support.

To solve the talent challenge, we intend to roll out a capacity building program to train enterprise owners and delivery companies on management best practices and IT usage. We are already in talks with potential partners like Logiprenuer who provide business development services for delivery companies to train our dispatch partners. 

We also envision a partnership deal with a financial institution in Ghana to ease access to credit for MSMEs. Because we have data on MSME performance we believe we can broker lower interest rates for MSMEs. By contrast, strategically, such value-add can attract more customers and help us generate more traffic for our business in a virtuous circle. When it comes to improving access to the internet, we aim to partner with telcos to provide special data packages to our customers. In hardware, we are already speaking to few distributors in the country to give us access to better deals.

We are a team of 10 full time staff

Gilbert holds a Bachelor's degree in Computer Engineering whereas Awura carries a masters degree in International Business. Both founders, although come from different backgrounds, share a common entrepreneurial drive. When they first met at University in Ghana they had embarked to start several businesses together. They started with an e-commerce venture, delivering items to students. They soon realized that logistics costs were too high and margins were low too. They then founded another company, pivoting more towards food delivery, however the app never launched. We then understood we must address the problems with retailers, most notably a mismatch between stock and delivery availability. Out of this problem and after three years of iteration in the logistics sector grew our current business: Sumundi. Entrepreneurship is not easy in Africa. The team's motivation and strong understanding of the local context and technology applications are key to our market positioning. Failure and iteration made the team only resilient and rendered them skin in the game in tough markets like Ghana.

Sumundi has partnered with Greentec Capital Partners and MBC Africa in order to help the company manage its growth stage. The partnership is allowing Sumundi to benefit from the operational and strategic expertise Greentec Capital and MBC Africa has to offer. This includes:

• Establishing partnerships with dispatch providers in Ghana

• Setting up an advisory board

• Communication and PR management

• Co-working space

• Rebranding and marketing

• Tech support and app enhancement

• Financial modeling and forecasting

• Migration of servers from GoDaddy to AWS

• Access to wholesale networks

• Market studies to identify potential new markets for expansion

Sumundi’s business model includes two interrelated product offerings, the first being KeepSales and the second Cliqrun.

KeepSales unique selling proposition is integrating both bookkeeping and stock tracking under one software platform. The software helps store owners record sales, track inventory, manage warehouses and branches, improve and simplify workflow by automating deliveries, learn about customers and their preferences, and get business insights to make informative decisions. Since most enterprises find such practices new, our offering includes a setup and training session, where our sales team introduces and installs the software and then helps with the data input. The client is then charged a subscription fee depending on their financial capacity (i.e. monthly, annually or a one-time upfront payment)

Whereas with Cliqrun, shop owners can fulfill customer deliveries by tapping into a pool of aggregated delivery agents. The emergence of smartphones, social media and innovative apps has changed the modes of customer interactions drastically making deliveries an integral part of any retail business. Essentially, eliminates the hassle of searching and calling delivery agents anytime stores need delivery to a customer. As a by-product of understanding stock performance through KeepSales, the integration of logistics partners under the same app serves as a strong unique proposition for store owners, as it feeds back the management of stock in real-time while at the same time expands the business prospects by reaching out to more customers. For such a service Sumundi charges a commission fee.

Sumundi generates revenue through two streams:

1. Via KeepSales subscription fees (Once off cost of $201 for offline or $42/yr for online) and;
   

2. A $0.3 Commision fee per delivery using Cliqrun

Since the beginning of 2020, business deliveries were seen to grow at 73% CAGR (Jan - May)

So far, Cliqrun makes 40% of total sales revenue, whereas KeepSales generates the rest 60%. Under such operations we are able to cover our COGS at a gross profit margin of 80% improving our financial sustainability as we continue to grow and cementing our scalability prospects. However, given ascending expenses we have been running at net loss. We forecast that we will achieve profitability by Q2 2021 when hitting 120 users.

In order to boost our marketing efforts and improve our client acquisition strategy we have partnered with Greentec Capital Partners who supported us with a $26,000 interest-free loan deployed in marketing efforts, team expansion and office equipment. Greentec Capital is also taking up some cost items on their side such as communications and PR, migration to AWS server, developing partnerships with delivery companies, office space and tech support when needed. This has saved us $50,000 allowing us to achieve financial stability till 2021, which should translate into financial sustainability.

In the long-term our strategy is to shift the growth trajectory from Keepsales driven sales into Cliqrun as we improve delivery services and drive down delivery prices, which will increase our revenues from delivery commissions.

We have a strong belief that with technology Africa can leap its development path by empowering businesses that millions of people depend on. Becoming a solver would render Sumundi a community of experts, who we believe will aid the company’s growth stage with the right support from mentors and peers. It is very crucial for us to seek such support as we adapt to new global challenges everyday. We want to be inspired by new technologies and new ideas that can enhance our product and help us serve more enterprises and faster too. We can benefit largely from financial support too as we seek further experimentation and validation of our business model. We want to find inspiration in new hardware that can optimize data collection for micro-enterprises without access to the internet. We want to learn about new software that can generate better insights for our customers and help them better manage their stores. We want to go a step further and integrate data into credit scoring algorithms that will allow banks to provide micro-loans and expand their business. In Africa, we face many problems everyday, yet we persevere because we like to see challenges as opportunities. We understood that micro-enterprises dont have an enabling environment for them to thrive, so we crafted one for them. We also understand our constraints for growth, and so being a solver can get us the right contextualized support for our path to growth.

Strategic partnerships are foundational and beneficial to Sumundi’s model. We keep our focus on our deep technological capability to create products and services while our partners contribute their expertise and capacities along the retail value chain (logistics, financing, supply chain and business development) to provide our retailers with a complete business boost. The partnerships leverage the strengths of both our organisation and the partners’ organisations to provide unique outcomes.

Product/service distribution and media partners will help us easily reach out to the larger masses.

Also, the nature of our operations lead us to interact with multiple businesses and stakeholders. This involves a lot of data and sensitive information being shared across. As a startup, it’s paramount that we are able to stay within regulatory bounds in all our business activities.

We see strong value in partnering with local organizations in Ghana, as it shall pave the way for a greater access to retail networks and thus stronger customer acquisition. Some of these organizations are:

• Pharmaceutical Society of Ghana

• Makola Foundation

• National Board for Small Scale Industries

• Media outlets, social media influencers and bloggers

• Ghana Association of Women Entrepreneurs

• Micro Credit Association of Ghana

• Ghana Cooperative Susu Collectors Association

• Ghana Association of Microfinance Companies

• Ghana Association of Savings  and Loans Companies

• Ghana Trade Fair Company Limited

Partnering with these organisations can give us a huge boost in our ability to reach out to the masses and create more awareness and trust in our solutions.

We believe the GM Prize is a good fit for our goals and goes in line with our business values in enabling small businesses in Africa to sustain their incomes and grow their businesses using our technology.

The prize will be allocated across three areas:

1. Market expansion: We have plans to grow our foothold in Ghana and expand to neighbouring countries such as Nigeria by growing our sales team localy and regionally.
2. Product developemnt: We aim to enhance our exisiting product offerings and further introduce new product features, most notably credit access to MSMEs and business development.
3. Marketing and Sales: Boost our sales and marketing efforts by targeting a larger number of retailers.