TradeDepot, an African B2B e-commerce platform that connects retailers to FMCG manufacturers, has decided to produce sardines.
The startup is expanding its business by moving into food production by launching its own food brand, Mangrove, marking a strategic move up the supply chain. Currently, TradeDepot’s catalogue includes 13 products ranging from flour and oils to various ingredients.
In an industry where margins are slim—typically between 5% and 12%—startups are increasingly seeking ways to boost revenue from existing customers. While some, like Omniretail, are doubling down on fintech through acquisitions (such as its purchase of Traction Apps in 2024), TradeDepot is taking a different approach with backward integration. By leveraging its platform’s data on retail demand and its established distribution network, the startup aims to produce and distribute affordable staples like rice, flour, canned goods, and yes, even sardines.
This strategy mirrors global trends where companies develop in-house brands—think Amazon Basics or Costco’s Kirkland—to gain pricing control and create a competitive moat. For TradeDepot, Mangrove offers two key advantages: it can set competitive prices while maintaining quality comparable to well-known FMCG brands, and it can protect its market position in a sector marked by low product differentiation and aggressive price competition from small-scale, informal wholesalers.
Consumers in TradeDepot’s home country stand to benefit from this move, especially as inflation hovers above 34.8%. By offering lower-priced alternatives, Mangrove could help shoppers save money on everyday purchases.
However, the venture is not without challenges. Moving into manufacturing introduces complexities that are new to a company traditionally focused on distribution, such as increased working capital needs and the operational intricacies of manufacturing and importing. Despite these hurdles, the high-risk, high-reward nature of the move could pay off. Successful market penetration could not only drive revenue growth but also position TradeDepot as an attractive acquisition target for larger FMCG companies in the future.
