Pricepallya Nigerian online grocer for fresh produce and packaged food, has raised $1.3 million in 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 former 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 bring back group shopping to deliver on its promise to enable consumers to buy food at affordable prices. The startup facilitates same-day or next-day delivery of products ordered through its digital channels, including the app and WhatsApp chatbot. It has a network of fulfillment centers within the three cities in which it currently operates, but outsources delivery services.
Luther Lawoyin (CEO), Deepak Bansal (CTO), Mosun Lawoyin (CXO) and Jummai Abalaka (COO) launched Pricepally in 2019 to lower food costs, ensure availability and keep prices predictable amid shortages and rising prices exacerbated by rising inflation.
Pricepally co-founders. Image Credits: Pricepally.
The startup says it sources fresh produce directly from farmers, some of whom it has contracted, and packaged food from manufacturers. Luther Lawoyin told TechCrunch that product prices are often negotiable, which, combined with small food supply chains, ensures his procurement costs are affordable.
“We have more control over quality and supply because we have specific farmers who supply specific products. We also conduct price research in all local markets and our prices are much fairer and this is precisely because we have taken out many layers of middlemen. The idea now in the future is to use our power to solve one of the biggest problems in Nigeria right now which is food insecurityLawoyin said.
“In many ways we are more than just selling products. We offer transparency and visibility in the market.”
Lawoyin ranks transparency among the key contributors to Pricepally’s steady customer account growth and high customer retention. Its existing buyers account for more than 80% of its revenue: proof of the validity of its value proposition.
The startup mainly targets retail buyers, who make up 70 percent of its customers, because, unlike businesses, they pay upfront, are cheaper to acquire and margins are higher, Lawoyin said.
The startup expects the reintroduction of online group buying, which will allow even more retail customers to come together to unlock wholesale prices, will help accelerate its growth as food prices continue to bite. In addition, it is also trying to unlock new customers by April, the new WhatsApp chatbot launched targeting the mass market in Nigeria, one of the countries with the highest WhatsApp usage worldwide.
Commenting on the deal, Rena Yoneyama of Samurai Incubate told TechCrunch: “The great thing about Pricepally is their ability to execute. 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 service quality, increase customer satisfaction, gain customer trust and generate a very high percentage of repeat customers. The healthy economics of their units and continued business growth prove this.”
