How it all started
In his native place Patuakhali, co-founder Afeef Zaman became fascinated by the pottery cluster there. The community consists of five to six thousand families, the biggest of its kind in South Asia. But the evolution of plastic started taking over the market. However, Afeef Zaman discovered that the core reason is the long supply chain and not having direct access to customers. It’s a common problem for almost all small businesses in our country.
Problem-solving-minded Afeef started thinking about an effective solution to address the problem. An idea eventually gave birth to ShopUp and made him today’s Afeef Zaman, the co-founder and Chief Executive Officer of the startup! The other co-founders are Siffat Sarwar, Ataur Rahim Chowdhury, Navaneetha Krishnan, and Sujayath Ali.
In Bangladesh, there are about 4.5 million neighbourhood mom-and-pop stores, known as mudi dokaans and the vast majority of them have no digital presence. Whereas, it accounts for 98 percent of the country’s retail sector. As a result, the retail market here is one of Asia’s most fragmented ones. As a result, these small business owners confront numerous obstacles. They don’t have access to a large catalogue for inventory selection, they can’t negotiate good pricing and faster delivery.
ShopUp has constructed a full-stack business-to-business commerce ecosystem to address these difficulties. Small businesses can now use their primary services, including B2B sourcing through logistics, wholesale marketplace, working capital through agreements with banks and other partners, and business management software.
Business Model of ShopUp
Since 2018, ShopUp has been known as only an online platform supporting SMEs in reaching customers. As soon as the Coronavirus pandemic began, the start-up quickly shifted its gears and expanded its business operations to support the then vulnerable SME owners across the nation.
However, it’s tough to define ShopUp by category. It belongs somewhere where eCommerce, capital, logistics, and B2B services intersect. The company likes to introduce itself as a full-stack B2B commerce platform for small businesses.
However, the business model of the company is simple. It has three products: B2B wholesale marketplace ‘Mokam’, logistics service ‘REDX’, and small business working capital financing service ‘Baki’.
Mokam is a B2B commerce platform of ShopUp that serves small neighbourhood shops. It provides access to a wide range of products – all available at the tap of a button. In other words, Mokam is a complete solution to a retail business and follows a ‘merchant-first’ model. It is the key player in achieving ShopUp’s ultimate goal while RedX and Baki, the other two services, came out later to support Mokam.
Redx was basically born as a complementary concern to support Mokam. However, it ended up being an end-to-end logistics wing of ShopUp, offering the largest coverage in Bangladesh. It provides its service to 64 districts and 493 Upazilas of Bangladesh.
Baki is the digital embedded financing service of ShopUp that provides supplies on credit, empowering thousands of small traders with an easy alternative to the complexities of traditional financing.
Investment rounds raised by ShopUp
ShopUp’s strong execution ability as well as its ability to shift with change attracted international investors. ShopUp raised a $22.5 million investment in its Series A round in October 2020. The investment round was co-led by Sequoia Capital India and Flourish Ventures. For both venture firms, this was the first time they were investing in a Bangladeshi startup. Veon Ventures, Speedinvest, and Lonsdale Capital also participated in the round.
ShopUp closed a staggering total of $109 million financing round in the Series B round. Peter Thiel’s Valar Ventures and Prosus Ventures led a $75 million, being the largest by a Bangladeshi startup and a B2B commerce company in the South Asian region. Four months later, it closed a $34 million Series B extension round led by Tiger Global Management.
ShopUp is on tremendous growth momentum, having 13x growth over the past year alone. Currently, it is serving over 500,000 retailers and has 200 distribution hubs.
ShopUp already has an office abroad, that’s in India’s Bangalore, where a large portion of its tech and engineering talent is based. The company plans to deploy its funds in part to expand its team, cover the whole country, and then expand beyond the border.
Undoubtedly, ShopUp has been the pioneer in changing foreign investors’ impressions of Bangladeshi startups. So, that’s all here. That’s the story of ShopUp— how a startup is playing a crucial part in the country’s retail industry.