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Revolutionizing Access to Credit

Revolutionizing Access to Credit

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Revolutionalizing access to credit - The Spark

Karen Adie describes herself as a “tech professional with an entrepreneurial mindset”. After gathering a wealth of experience with heavy-hitting multinationals like Goldman Sachs and The Tata Group, she’s now heading Merchant Services at TradeDepot and in this interview, reveals how she’s making her mark along the fine lines between Tech and Retail Business. 

Filling Financial Gaps 

We identified that the supply chain is fragmented. The fact that there are multiple wholesalers, suppliers and conflicts in price constitutes a lot of problems. The biggest losers in the midst of all these inconsistencies are the informal retailers and even worse, the final consumers. We largely serve informal retailers, who make up the larger population of retailers and banks consider them to be high risk. We are filling this gap by supplying goods to informal retailers straight from the manufacturers. 

We also figured that there was a lack of data and transparency on the side of the manufacturers. Many don’t have proper market insights such as what goods are moving faster in the market currently or what to focus on in terms of planning and procurement. With technology and our understanding of data, we are bridging the gap between the manufacturers and the retailers thereby mending the fragmented supply chain. When we identified this problem, we started our ecommerce platform. 

With our platform we were able to gain more information on what the actual problems of these informal retailers are, their abnormal purchase patterns and the shortage of capital they experience. With this, retailers can gain access to credit and thrive in an ever-evolving and fast paced economy.

How TradeDepot is Providing Access to Credit

Working capital is very key for any business. Credit supplements working capital and increases the potential sales of a retailer. Credit basically increases the margins for a retailer and allows them to purchase and sell more goods. It means they can serve more customers and grow over the long term. Credit also helps retailers diversify their products and serve a wider audience. We’ve seen cases where small scale retailers expand their business and open more shops/outlets as a result of the short-term loans they’ve taken in the past.   

In a nutshell, TradeDepot uses what is called an Inventory Financing Program for informal retailers. We don’t offer cash loans. What we do is that we finance their inventory purchases through our ecommerce platform. So, at TradeDepot as opposed to giving a cash loan of say N100,000 to a supposed retailer, we fund their next purchase and double the value of their purchase. So, when a retailer purchases goods worth N100,000 through our platform, we increase the value of that purchase to N200,000 or more for example. 

We invite eligible retailers to apply on our platform and with their 90-day history we determine a credit score for them. This allows us to determine how much credit we can give them and for what period of time. Our loans typically range from N50,000 to N500,000 for a tenure of 2 weeks to 8 weeks and our interest rates are between 5% – 6% monthly. Inventory financing helps to make retailers more accountable and cautious about their use of funds. 

Financial Problems, Tech-Based Solutions 

We are using technology-based solutions to drive change for businesses in line with their main goals and objectives. These digitally driven changes can be more internal such as improving your process efficiency or they could be more external in terms of improving user experience, developing a new product or a new market offering and generally, creating a bigger impact. We are a tech company that’s providing ecommerce and credit solutions and not the other way around. We’re also a data-driven company. We experiment and create solutions based on the data we track and analyze.   

At first, we did some research to determine if the informal retailers we were targeting had smartphones or were savvy enough to use the app we intended to develop. Our findings showed that over 80% of them did have smartphones and were more than capable of using our app. Today, our entire lending process is automated. The retailers can apply for credit, track their orders and all other information on our mobile app quite easily. We’ve extended credit to over 1500 borrowers and we’ve given out about 3000 loans in general. We wouldn’t have been able to achieve this if the process was not automated.  

Infiltrating the Market 

We’ve actually had to do a lot of education on credit, financial knowledge and building a credit history. We have agents whose responsibilities are to market our products and educate small scale retailers within geographical areas. Our agents also perform market surveys which help us pitch better wholesale prices and service offerings to the informal retailers who we are targeting. Our experience in consulting for companies in fast moving consumables helped us understand the market better. 

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We’ve been into ecommerce long before we decided to venture into lending and this means that we have a very strong relationship with our suppliers. It takes 72 hours at most for us to stock up whenever we run short on supplies and then we can always deliver to the retailers on our platform.

A Glimpse Into The Future 

Effective use of social media cannot be overemphasized for small businesses. Social Media is such a huge pool of people, resources and data for entrepreneurs to learn and navigate through. It also presents a great opportunity to get mentored and sell your products. 

For us the technology aspect is easy, the hard part for us has been logistics. We’ll like to see more tech-driven solutions in logistics which will in turn support our own efforts. Amenities such as credit and insurance should be as inclusive as possible. It’s very easy these days to open a bank account and having access to credit for your business should be just as easy.     

The best part about what TradeDepot does is connecting the big brands like Nestle and Guinness to informal retailers in local markets. We want to get to the point where we’ll have more players in the market who are also driving financial inclusion and access to credit through technology. Not just for ecommerce but for retail generally. Getting more suppliers into the market in order to drive the economy forward. From where we are presently we may have only but a glimpse into the possible future of small scale retail but so far it looks quite bright.   

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