Entrepreneur spots opportunity in Nigeria’s informal retail market

Over the past two decades, modern shopping malls and air-conditioned grocery stores have been popping up across Nigeria. Yet, this is not where most Nigerians shop. An estimated 90% of retail transactions still take place through informal channels – a vibrant ecosystem of roadside vendors, open-air markets and hawkers weaving through traffic. These informal retailers are believed to number in the millions. For consumer goods companies hoping to reach the bulk of Nigeria’s population of over 230 million, getting products into these outlets is essential.

Entrepreneur Deepankar Rustagi saw an opportunity to make the informal retail system more efficient by digitising the flow of consumer goods. In 2019, he founded OmniRetail to connect manufacturers and distributors to small retailers in Nigeria. The company also offers digital payment solutions and access to credit through its Omnipay product.

For instance, a small shop in Lagos may find it difficult to keep its shelves stocked because of limited cash on hand and unreliable suppliers. With OmniRetail’s app, shop owners can quickly place orders directly with a network of distributors. Deliveries usually arrive within 48 hours. Shop owners can also take advantage of buy-now-pay-later options, helping them to manage cash flow and keep shelves stocked without having to pay immediately.

At the recent Africa CEO Forum in Abidjan, Côte d’Ivoire, Rustagi explained that because of the informal nature of retail in many African countries, manufacturers often lack visibility into what happens to their goods once they leave the warehouse. They typically don’t know where stockouts are happening and where there’s surplus inventory.

Traditionally, informal retailers have also struggled to access credit because most transactions are in cash, leaving little trace for lenders to assess risk. “Globally, whether it’s in Europe or the United States, the entire FMCG trade has organised credit available,” Rustagi noted. “But in the markets that we operate in sub-Saharan Africa, that credit is missing.”

By digitising retailers’ transaction data, OmniRetail has made it easier for lenders to extend loans to these shopkeepers. “This data is now utilised so these merchants can get collateral-free loans which was not a possibility [before],” he added.

Today, OmniRetail works with 130 manufacturers, including Coca-Cola and Kellogg’s, and has expanded to Ghana and Côte d’Ivoire. The company reached profitability in 2024 and, in April, secured $20 million in Series A equity funding led by Norfund and Timon Capital.

Adapting products to local market realities

Rustagi said companies must adapt their products and distribution strategies to fit the realities of the Nigerian market.

When it comes to innovative distribution methods, he pointed to the dairy company Fan Milk. Founded in the 1960s and fully acquired by French multinational Danone in 2019, Fan Milk has developed a highly efficient last-mile distribution network. It relies on thousands of bicycle and tricycle vendors in urban and peri-urban areas. These mobile vendors use insulated containers to keep frozen dairy products cold, enabling them to weave through congested streets and deliver directly to customers.

“Fan Milk has taught Nigeria how to have ice creams. The way ice creams are sold in Nigeria, it’s a unique concept. There is a bicycle with a box in front and that bicycle man does not have an electric refrigerator. It’s basically a box that he’s carrying and that’s how kids in Nigeria have seen ice cream for the last two, three decades,” he said.

Another important factor, he explained, is selling products in packaging sizes that are affordable for people with limited disposable income. He mentioned a bleach brand in Nigeria that gained traction when it began distributing its products in 100ml bottles instead of the traditional larger ones. Similarly, sales of corn flakes in Nigeria rose sharply after the product was packaged in smaller 150g sachets.

“Distribution for those products has grown 20-fold from where they were. And that’s just because [of] understanding the capacity to pay of the consumers in those markets and actually launching [a] product that meets their requirements,” Rustagi explained.

Related articles