African Small Businesses Have Many Challenges. Can These Platforms Help?

Justin Norman: This is a small business in Nigeria. And this is the small business owner, Lateef Adegoke. 

Justin Norman: I paid Lateef a visit to his tailor shop in Tinubu Square in Lagos Island to understand some of the challenges that someone like him faces in running a tailor shop. 

Lateef Adegoke: So many challenges dey. Challenge to get customer, to get what is no easy. I'm praying to grow more like this. To have factories or to have more boys, more workers.

Ibi Cookey: So the process for custom clothing. Very manual, very labor-intensive and very prone to error. But what you have is a situation where customers really have unprecedented power.

Justin Norman: That’s Ibi Cookey, the CEO of Fitted. He’s trying to help tailors like Lateef better operate and grow their business. 

Ibi Cookey: There's the style, there's the fabric, and there's the measurements. Anything can go wrong, very wrong in any of these three places at any point in time.

Justin Norman: But to help Lateef grow his business means solving multiple problems across the value chain. And this is representative of a lot of sectors across the African continent, which ultimately limits the potential for scale of the businesses in these markets. So for jobtech platforms to be successful in Africa, they have to solve many more problems than comparable platforms in, say, the global north. And in doing so, these platforms are creating better outcomes for platform workers.

Justin Norman: In our prior two episodes of this series on jobtech platforms and the future of work, we argued, first, that the future of work is a portfolio of work, and second, that it will be bootstrapped. In this episode, we need to dive deeper into the value chain. In exploring that question, I’m reminded of a conversation from our prior season on the future of work. 

Chris Maclay: The traditional, western job tech models of large-scale job matching, which is providing a technology layer that connects supply to demand, is very difficult to replicate on the African continent,  where the problem is not just information asymmetry, but many, many different layers. 

Justin Norman: That’s Chris Maclay, the Program Director of the Jobtech Alliance, and formerly the COO of the home services platform Lynk, based in Nairobi. 

Chris Maclay: You are often dealing with a skills deficit. You're dealing with a lack of access to assets or financing. You are dealing with all sorts of infrastructure from high-cost transportation to get to gigs to lack of digital connectivity. Platforms tend to need to do a lot more in order to be successful.

Justin Norman: One sector that’s a representative example of this multi-layered challenge is fashion. 

Ibi Cookey: You have the complication around getting the measurements, storing those measurements. There's the logistics of getting the fabrics, and then lastly, the logistics piece of how the actual outfit gets fulfilled can be one of the biggest challenges for them.

Justin Norman: Ibi is the Founder and CEO of Fitted, a platform providing software tools for tailors and connecting tailors to demand in Nigeria. Considering the uniqueness of the fashion value chain and the needs of tailors, in particular, it’s a vertical platform tailor-made (pun intended) for tailors. ‍

Ibi Cookey: For us, over here, probably half of the people's wardrobe is custom and they are an important part of even our social engagement. Weddings, funerals, milestone birthdays, milestone events usually herald something called Aso Ebi, which is a specific type of fabric that people say, if you are like representing me at this event, make an outfit with this. And it's culturally embedded. It's deeply baked in.

Justin Norman: There is the cultural element to made-to-order fashion in Nigeria, but there’s also a pragmatic, economic element, as well.

Ibi Cookey: One of the problems that the ecosystem has is capital. What you have is a case where tailors and brands try not to keep inventory. A lot of people and brands don't have the money to sink a hundred styles and say, Hey, this is what I can do. So people tend to do made-to-order. 

Justin Norman: Tailors, like many other entrepreneurs, have to do so much more than just make clothes in order for their business to grow. This is where Fitted is trying to help. 

Ibi Cookey The first thing that we built was the tailor app. You can create measurements, store measurements, send them to customers, request from customers. For tailors, this gives them the first online repository for their customer measurement information that they'll never lose.

Justin Norman: The idea is that with improved operational efficiency comes higher revenues and margins. 

Ibi Cookey: When you look at how they track their businesses, it's very unlikely that you'll find a tailor who knows what alteration rate is. It’s very unlikely you'll find a tailor who knows what their first-time fit rate is, which is out of the last 10 products that they did, how many fit the first time and how many didn't.

Ibi Cookey: On average, tailors are three times more likely to get an outfit that fits the first time when they sew with Fitted. And just the reason for that is you have a single place to store your measurements, A single place to see style, a single place to see fabric. For these businesses who aren't very operationally efficient, anybody who can introduce some, some loss of efficiency to them will actually help them get better ROI for their own time.

Justin Norman: So the operational challenges are one layer being addressed by Fitted, which then enables them to address other layers of the value chain, like demand. 

Ibi Cookey: So we started a new business line in July, August, where we started servicing fashion brands. We have over 10 fashion brands that we're working with, and they are also off-taking production from us. Becoming a vetted tailor means that you now become a brand that we can push orders to. And then with our operational procedures and tools, we sit in the middle to make sure we vet and guarantee quality. And in pushing orders, you know, uh, typically or the tailors who sew with us or who make outfits with us, they make about three times net margin, like three times higher net margin.

Justin Norman: Fitted is aggregating supply, with the help of technology, to more efficiently scale up production. And they’re doing it in a way that contributes to the tailor’s portfolio and diversification of revenue. In the case of Lateef, in Tinubu Square, around 35 to 45% of his weekly production comes from Fitted. 

Ibi Cookey: So what that's done is it's also given tailors a completely new revenue stream, whereas before they were doing one-off pieces. So we might give you ten orders in a week, but they'll be for all different measurements. Now they're getting ten block orders, which is the same. Produce this in a medium ten times for this fashion brand.

Justin Norman: So here’s the upshot for jobtech platforms. In an environment of demand constraints, building enabling infrastructure can unlock growth opportunities for their users. This is what makes jobtech platforms successful - not only generating demand for their users, but in solving problems across the value chain, unlocking additional revenue streams for platforms, to achieve greater profitability. 

Justin Norman: But this is also what makes jobtech platforms so hard to build in Africa; having to solve so many problems is expensive and complex, but with potential upside from an income generation perspective. And for SMEs, in particular, this is what platform-induced growth is going to look like. 

Ibi Cookey: I think one of the most heartwarming stories, for me at least, is a story of one of our vetted tailors Sique, when he started off, it was just him. Now he's got about nine staff. He's a vetted tailor, so we push orders to him. We've pushed millions of Naira to him, but I cannot say that it's the millions of Naira we gave him that helped him expand his business. I told you about the operational processes that he got from us in terms of protocols, what kind of stuff you check, having somebody who's just for QA on measurements, checking and finishing, all these things helped him grow his business. So for us it's really how do you provide tools across the value chain of this service for tailors so that they can go from being small to being large on your platform.

Justin Norman: For more on this topic, check out the future of work podcast series we published last year - which we’ll link to in the show notes - and check out the work that the Jobtech Alliance is doing at jobtechalliance.com. And one more thing, if you enjoy the show and want to support the content that we create, please hit that subscribe button. It only takes a second, but it will mean a lot to us if you do.