After over five years of running Gloo, the management of PayMente Limited decided to move away from e-commerce into e-procurement citing early-stage profitability of the latter.
Gloopro's launch coincides with Lagos State's timing to launch an e-procurement platform to bolster public governance. The Governor of Lagos State, Nigeria's highest revenue generating state announced this at the second edition of the Lagos State Annual Public Procurement Summit held at the Lagos Airport Hotel, Ikeja, Lagos. The CEO of PayMente, Olumide Olusanya, tells us that the Lagos State announcement was fortunate.
"I'm aware of the Lagos State's decision to rollout e-procurement this month and that happens to be a coincidence with our public launch. However, it may also be a good indication of the fortuitousness of our timing", says Olusanya.
The pivot was imminent especially as Gloo's (e-commerce) revenue slowed post-2016 recession. Yet, it was not until some of their enterprise customers begun asking for an e-procurement solution that they decided to pivot.
"A couple of enterprise customers we were serving with our legacy service asked us to solve this for them. The more we dived into it, the more it sucked us in. And here we are now", D.O Olusanya told Benjamin Dada.
We were pulled into enterprise e-procurement by our customers.
So, since mid-September 2017, the team and management of PayMente had been working on their new business line. Eighteen months in and they have raised $1 million in seed capital from US Hedge fund and venture capital, Agronautic ventures and Tofino Capital, an early stage investor in emerging market technology companies.
Gloopro, Nigerian market and foreign competitors
Gloopro is a platform that enables companies to procure and pay for goods electronically. Additional features include multiple user profiles and access management, spend analysis and on the higher end, integration to existing Enterprise Resource Planning (ERP) tools.
Enterprise users of Gloopro are charged a subscription fee monthly or yearly across their four payment packages, namely; free, basic, premium and integra.
Major global ERP providers like SAP (Ariba) have flooded the market in such a way that indigenous solution providers need to have a strong differentiator to be competitive.
Speaking on competition from global entities, Olusanya says that the existing providers are less likely to solve Africa's unique problem because the business emanating from here represents a lesser return on investment for the global group.
As more large enterprises in Africa move to further digitalise their processes, they are finding global solutions inadequate in meeting the local flavours and requirements for their indirect spend procurement process. On the other hand, the providers are unwilling to invest in solving this because Africa represents a much lower ROI profile to them compared to other global markets. The gap between these 2 positions is rapidly widening. That is our opportunity!
Deviating from a Business-to-Consumer model (Gloo) to a Business-to-Business (Gloopro) model can be daunting, especially, if the entrepreneur has limited experience in the latter. For PayMente's Gloopro, they hope to leverage their years of experience in operations, payments, technology leadership and supply-chain management from sourcing to last-mile delivery.
Gloopro's vision is to become the go-to enterprise e-procurement platform in Africa, according to a statement on the company's website.
As it stands, they are making headway operationally and financially. On their website, they listed 28 companies using their software to power their operations, including multinationals like Uber, Coca-cola and Unilever as well as locals like HotelsNG. Also, they are looking to expand out of Nigeria by 2020.
In terms of financials, they predict revenues to reach $4 million by the end of the year.
"Gloopro expects to hit $4 million in revenue by the end of the year and the company could reach $100 million over the course of its international expansion into countries like South Africa, Kenya, Morocco, Egypt and the Ivory Coast", TechCrunch wrote citing founder Olusanya. An early-investor in D.O Olusanya also confirmed to us that Gloopro's revenue estimates stated on TC were correct.
To scale, the company has set in motion a Series A fund raising process.