It’s hard to get big as a small eCommerce seller. It’s also not easy to sell a small eCommerce business, however successful it is.
An interesting new Dubai-based company called Opontia is stepping in to solve these challenges and profit in the process. The company launched in March and has just raised US$20 million to provide small sellers in Africa-Middle East not just with an exit opportunity but also with a pathway to future earnings.
Opontia has a notable group of investors. These include Global Founders Capital, Presight Capital, Raed Ventures, and Kingsway Capital. What’s most interesting is the list of angel investors from the region’s eCommerce industry putting money into the company. For example, Razor Group CEO Tushar Ahluwalia; Jumia Co-founder Jonathan Doerr; and Tabby CEO Hosam Arab.
Opontia’s plan is to acquire small eCommerce retailers, those with at least US$10,000 a month in sales and 50% margins, and bring them onto its platform.
“The market in the Middle East and Africa is currently less mature than in the West but is growing faster than any other market in the world, with the number of sellers on market place growing at over 50% per year,” Opontia Co-CEO Philip Johnston told us over the weekend.
“The business model will work here because there have been so many amazing entrepreneurs in the Middle East coming up over the last few years. It’s a great opportunity for sellers to be able to realize some of the hard work from building their brand so that they can take a break or work on their next big thing.”
Opontia’s leadership brings a wealth of eCommerce expertise. For example, Johnston worked on eCommerce strategy projects at McKinsey. His counterpart Manfred Meyer worked at Lazada, a major Southeast Asian eCommerce marketplace owned by Alibaba.
Further, Opontia’s VP Brand Management Shruti Arora worked at Middle East eCommerce retailer Namshi. VP, Investments & Acquisitions Balagopal Menon is ex-Amazon. And finally, VP, Operations Mohamed Benyahia was an early employee of Noon.com.
Opontia’s value proposition is to use technology and know-how to create scale across thousands of online sellers.
“The plan is to roll them up under a common platform but not a common brand. We will roll out an omnichannel technology solution to manage the different platforms including warehouse management systems, ERP, stock management, and commercial management across platforms,” Johnston told us.
As for what’s in it for the seller, it’s about being able to achieve more as part of a larger platform.
“The pitch is that we can increase sales by pushing products to new channels and markets and cutting costs by efficiently running the operations,” Johnston said.
Johnston said Opontia’s deal structures combine guaranteed payments and upside.
“There is an upfront payout and then some share in the increase in profits over the following years,” Johnston said. “We tailor it depending on the seller’s needs and risk appetite.”
There is precedent for Opontia's business model. One example is Thras.io. The U.S.-based company raised US$750 million in February to further fuel its plan to roll up third-party Amazon FBA (fulfilled by Amazon) sellers.
Also, Berlin-based Razor Group, whose CEO invested in this round, does essentially the same thing in Europe.
Much of Opontia’s roll-up opportunity appears to be in the third-party seller space. For a sense of the size of Opontia’s opportunity, there are a reported 30,000 independent sellers on the Amazon and Noon.com marketplaces in Africa and the Middle East. Johnston insists there is no shortage of available market for Opontia.
“There are thousands of sellers that meet the threshold,” he said.
He also said the $20 million raise is a mere downpayment on what the company will need to fully seize the opportunity to create scale among these thousands of sellers.
“Yes, $20 million is just a start. We expect to raise much more capital,” he said.
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