RedCloud started in 2014 with the aim of building a democratised commerce system for the world. Soumaya Hamzaoui is one of the co-founders and technology architects of the company, tasked with developing and refining its open commerce proposition for FMCG brands, distributors, retailers and local merchants based all over the world.
We spoke to Soumaya about the company’s progress, its ambitions for the next 12 months, and her conviction that technology must always serve both an economic and societal purpose.
Can you talk about the current strains in global supply chains and where RedCloud fits in?
Global commerce is under real stress. In many parts of Latin America and Africa, local merchants are facing a shortage of suppliers and limited stock. They need to find other solutions to keep servicing their consumers. The pain is acute, particularly in the fragmented markets in which we operate. In the worst cases, consumers cannot access essential goods, such as food, washing powder or nappies.
While many have focused on supply disruption as the cause of these issues, distribution is a longer-term and more entrenched problem. Centralised distribution, concentrated in the hands of a few powerful players, has created a chronically inefficient market. Our goal at RedCloud is to break down these barriers and deliver open commerce. Our app brings together retailers, distributors and FMCG manufacturers to match supply with demand and deliver market insight to networks that have historically been opaque. We are a technology enabler, helping merchants, entrepreneurs, and small businesses to find affordable solutions and survive the difficult times that await them.
In the longer term, we see our role as fixing a broken market. Without better market information and technology tools to bring these disparate parties together to work harmoniously, supply chain shortages and spiralling costs will continue to plague global commerce.
Do you have examples of how RedCloud’s technology works in practice?
We ensure brands and distributors are better aligned with retailers. We see multiple examples of how this creates efficiency in the market. Last year, retailers in Johannesburg were experiencing shortages of certain popular liquor products and losing revenue as a result. We had, in our customer base, local suppliers in Cape Town that hadn’t previously been able to access the Johannesburg market. Through our platform, these two parties have come together – a win-win for consumers, retailers, and suppliers.
We are also facilitating cross-country trade. We have local brands in Nigeria offering high-quality products. Thanks to the market insights delivered by our technology, we were able to identify South Africa as a good territory for them to target. Many of these brands are now talking to local South African distributors. For us, it’s about offering alternatives where we see gaps in the market, giving more choice for merchants. This is particularly important at a time of high prices, when consumers urgently need cheaper options to manage their household budgets.
What are RedCloud’s growth priorities today?
We’ve made the decision to focus on the five markets where we are currently established – Nigeria, South Africa, Brazil, Argentina, and Peru – and go deeper, rather than immediately pursue further geographic expansion. We are exceeding our expectations for growth and speed of execution in each market. Growth is strong, around 300% per month, and we have built our team to 150. Our product suite is now well-established, and we’re putting the finishing touches on our financial services offering, ready for launch by the end of the year.
Why did you choose these five markets?
The problems of distribution are global, but these are markets where there is real fragmentation in the retail sector and a lack of access to technology. In the worst cases, distributors work on pieces of paper, with telesales execs calling people by phone or visiting in person to take orders.
Our objective is that any merchant, entrepreneur or small business in these markets can create an account on RedCloud and run their business through the phone. The first step is managing their relationship with suppliers directly via our Red101 app. The next is to order new stock and identify additional products to buy, expanding their distribution networks and access to local delivery services. Everything can be managed directly through our technology. Beyond this, our goal is to enable these retailers to become more consumer-focused, more professional, and better able to grow their businesses.
You also offer digital services on the app – how does that work?
Today, when a local merchant downloads Red101, they immediately gain access to an inventory of products across two categories. Firstly, they can purchase consumer goods, from FMCG giants such as Coca-Cola, Heineken, InBev, or Nestle, as well as compelling new FMCG products. Secondly, they can access digital products to sell to their consumers – for example, pre-paid services such as airtime for mobile or pre-paid electricity meters. This is a vital part of our proposition in our target markets because it gives merchants an immediate additional source of revenue.
You mentioned RedCloud’s soon-to-be-launched financial services offering. What more can you tell us about this?
As we’ve worked with more retailers and distributors, we’ve found that lack of access to credit and working capital is a profound constraint on their ability to sustain and grow their businesses. Many still rely on their income to buy more stock – hence, they’re working on a short-term, reactive basis, placing orders two or three times a week, or whenever they can afford the next order. This is not a sustainable way to work.
We have been talking to banks and institutions about how to unlock this problem. Our financial services offering is designed to allow any retailer or distributor using our technology to gain access to working capital loans or credit solutions and thus start planning their inventory management more effectively.
How does the credit analysis work for these loans?
That’s the really neat part. All of these businesses were previously trading offline, so there was no way to formally record and recognise their trade history.
Using our app, these retailers and distributors automatically create digital trading histories – proof that they’re performing as they claim. The banks can make decisions on the back of the trading history, aggregating this with data they already hold. It is the missing piece of the puzzle.
You’ve spoken about the importance of delivering timely and accurate data, plus real-world insights, to RedCloud users. What does that look like today?
Market data and insight is a crucial part of our proposition, improving transparency in the markets in which we operate and helping all participants to offer a better and more targeted way of conducting commerce.
We already have granular data to help FMCG companies learn more about the performance of their products in each market – something that is impossible to gather in the offline trading world. In the longer term, we are focused on developing predictive insights for everyone using our platform. This requires a lot of data, but it will be really valuable in helping FMCG brands and their distributors to focus on the biggest growth opportunities while helping retailers ensure they have the right products to meet anticipated demand.
The final piece of the insights proposition is marketing and communications. As our platform develops, we will be able to let FMCG brands leverage the data to run marketing campaigns through the app, targeting local merchants with relevant offers.
What is RedCloud fighting against?
Centralisation. Whether we’re talking about consumer giants such as Amazon, or the cash and carry kings of South Africa, we want to break the stranglehold of centralised distribution whereby a tiny handful of players control the pricing, the terms of engagement and overall access to the market. Centralisation crowds out suppliers and limits choice to consumers. That’s what we’re trying to disrupt.
Finally, you’ve said in the past that there needs to be a balance between building technology that helps the growth of society while also growing the economy. Can you explain that idea?
I don’t believe you should build a company just for profit or to make rich people richer. Technology should lift economies and societies, creating rather than destroying opportunities. Companies often lose sight of this.
For example, part of our value to distributors is that they can improve margins because they don’t have to have on-the-ground sales teams roving around trying to deal with local merchants. And what we see in practice is that, rather than firing these people, distributors are redeploying them in more valuable positions, such as technology or operations. In essence, this is what RedCloud is about: building opportunities for everyone involved in commerce, and the consumers they ultimately serve.
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