How ex-Jumia bosses raised Sh1b for e-commerce start-up

Ex-Jumia group executive vice president and Kenyan head Sam Chappatte is the brains behind Kapu. [Wilberforce Okwiri, Standard]

Shortly after quitting pan-African e-commerce giant Jumia, Sam Chappatte had managed to raise $8 million (Sh980.8 million) and wooed his former colleagues to build an outfit fashioned from their collective experiences at the New York Stock Exchange listed firm.

The ex-Jumia group executive vice president and Kenyan head is the brains behind Kapu, a business-to-consumer (B2C) e-commerce start-up backed by some of Africa's wealthiest families, global venture capitalists and tech founders, among other serial investors.

The platform, which officially launched on Monday has been operating "silently" since January this year, recruiting over 1,500 agents in about 25 Nairobi neighbourhoods. It is headquartered in Nairobi's Baba Dogo area.

"We've been working in e-commerce in Africa for a long time and the reality is that it's still very early on the continent making about two per cent of retail," Chappatte told Enterprise on Monday.

"If you want that to become much bigger, you want to create a service that is much relevant for a much bigger portion of the society."

"Kenya is Wanjiku. You have to design a model that works for Wanjiku and that is what we set out to do."

"Inspired by Alibaba's New Retail and the impact hard discounters like Costco and Aldi have had in the US or Europe, we believe there's a 'new retail' model for Africa.

"If we can crack this, we can sustainably bring down the cost of goods for millions of folks across the continent."

Kapu will focus on foodstuffs and other essential goods used in typical Kenyan households. It will tap into small neighbourhood business people as its agents.

Chappatte, who was the face of Jumia in Kenya for five years, left the African e-commerce firm that marked its tenth anniversary in November last year and is credited with helping accelerate its local growth.

Tech giants

He describes as "rock stars" the team he assembled which also comprises techies who've worked for giants such as Microsoft and Meta.

Ex-Jumia executive Sam Chappatte (right). He, alongside former employees, unveiled Kapu on December 5, 2022. [Wilberforce Okwiri, Standard]

"I think we have to prove it (Kapu's business model) but there are lessons we've taken from our experiences that have informed some of our decisions."

He says that they are now looking at proving profitability at a neighbourhood level, growing fast and expanding beyond Nairobi.

The plan is to be a start-up within as short a time as possible, he said on plans of breaking even. "Start-ups are hard...it sounds like a lot of money ($8 million) but if you want to do big things you have to take a bet."

Chappatte, however, noted the challenge ahead for Kapu which is a play on 'kikapu', meaning basket.

"Jumia hasn't (broken even) yet in the last 10 years, Amazon took 15 years. With a business model like this, you don't break even in a few years. What matters is, can you build a model that's inherently profitable?"

One of the key members of Kapu is Meera Dhanani, the Kapu head of marketing and also a former Jumia executive. She is credited with building Jumia's popular "Black Friday" campaign modelled around the start of the Christmas shopping season in the US in November.

Here, discounted prices and bargains are largely offered.

"It was an easy sell, it's a stellar team very experienced and mission-driven, targeting a larger mass market urban Wanjiku, so the idea that you can have a much bigger impact is what got me into joining Kapu," Dhanani said of joining the start-up.

She had left Jumia and was running her own e-commerce and marketing consulting services before joining Kapu.

Cyrus Onyiego, who had previously served as Jumia Travel managing director and Jumia Food chief operating officer (COO), is now Kapu's COO.

He said they had tapped into the gaps they had seen in the market while working for Jumia and it started with reviewing the e-commerce model to better make it work for ordinary retailers.

Kapu focusses on foodstuffs and other essential goods used in typical Kenyan households. [Wilberforce Okwiri, Standard]

"We used to do a lot of research at Jumia... on for example acquiring more customers and scaling ... after we left, we kept thinking of how to reach the African market effectively, especially the ordinary person," he said. In a way, the team believes they are "fixing retail."

"It's easier to say those things (fixing retail) but we have to earn the right to make those kinds of comments, we believe there's a better model for retail that combines bits of online and offline and which has a stronger impact on society," said Chappatte.

Kapu plans to expand across Nairobi by next year as it emerged from stealth and announced its Seed round capital which will finance the start-up's first steps.

The seed round was led by renowned global start-up investors such as Tommy Stadlen of Giant Ventures and Sam Endacott of Firstminute Capital, Base Capital, Norrsken and Founder Collective, among others.

"Fundraising is always challenging we were lucky to have investors who are excited about the potential of Africa.

"Investors that wanted to not only help build a consumer tech business but also to do things that have a positive impact in society," said Chappatte.

Social mobility

He said the majority of Kenyans spend over 40 per cent of their income on the everyday grocery basket making it a "massive blocker to social mobility and an equally large business opportunity."

Kapu is a social commerce platform leveraging on low-cost, and convenience and built around community.

A customer orders via an agent or directly, Kapu delivers for free to the agent the next day and a customer collects the goods from the agent paying on delivery.

The business is all about cutting the cost of distribution by for example aggregating deliveries and also removing secondary packaging, meaning that it doesn't deliver to people in bags and boxes as that adds to costs.

This model will earn them repeat customers who shop cheaply several times a week and want wholesale prices for a full shopping basket with Chappatte saying they have received about one million customer orders so far.

Kapu's Chief Operating Officer Cyrus Onyiego speaks at the launch in Nairobi. [Wilberforce Okwiri, Standard]

Shopping basket

"The biggest impact we have is creating disposable income back into the hands of our consumers," he said adding that customers have saved about Sh40 million in the last year. He notes that part of the reason why the shopping basket is high is due to factors such as production, input and transport costs.

They are playing their part by developing a new model of last-mile distribution.

"Over time others players in the supply chain need to step up what we can do is create scale and demand and can work with players such as manufacturers and suppliers to create efficiency," he said.

On competition, Chappatte says that there is space for many players as "the grocery basket is the single largest market across Africa."

He says that their biggest differentiating factor is that they are a B2C business.

This is compared to, for example, entrenched start-ups such as Twiga Foods which is a business-to-business (B2B) e-commerce platform.

Twiga Foods aims to simplify the supply chain between farmers, and fast-moving consumer goods (FMCG) manufacturers.

From Kapu, customers can primarily buy fresh produce and packaged consumer goods. "A customer can buy three onions or Sh15 worth of goods and have them delivered for free the next day, there's no minimum the way we make that work is that we aggregate delivery where one agent is serving orders for multiple customers," explained Chappatte.

The Kapu agents run businesses such as salons in the neighbourhoods they live in and work in. For them, Kapu is an opportunity to earn extra income and can rake in up to Sh6,000 in a good month.

For example, Damaris Maina, who runs a curtain tailoring business in Gitaru, Kiambu County is a Kapu agent which she fondly refers to as a side hustle for the last four months.

She's able to draw a commission by ordering and picking goods for her customers making up to Sh3,000 a week.

"The more I sell, the more I earn," she said. She says that goods such as flour, sugar and soap top the fast-moving ones in her area.