Exclusive: Kyosk’s acquisition of KwikBasket is a bet on increasing its digital distribution

Kyosk, a digital distributor, has acquired KwikBasket to keep its talents in-house. However, how does it differ from Twiga Foods?

Kyosk, a digital distribution platform, has entered the African fresh produce market with its Farm and Fresh business line. This follows its acquisition of KwikBasket, a player in agricultural distribution. Kyosk specialises in online retail distribution, employing a digital-first approach and data-driven insights to boost efficiency and connectivity in the supply chain.

Kyosk‘s business model

Kyosk launched in Kenya in November 2019. According to its CEO and co-founder Raphael Afaedor, Kyosk helps help mom-and-pop shops and small-scale farmers access the right services to improve their yield. The company also helps dukas (small shops) and kiosks get access to supplies, which they can then sell to their end customers. “Our business enables them to get access to the market.”

In 2020, Kyosk began expanding across Kenya, and by 2021, it increased its footprint to 42 locations across Uganda, Tanzania, and Nigeria. “If you go Abuja or Port Harcourt, you will find us there,” says Afaedor.

Increasing Kyosk’s value chain

Kysoks is leveraging backward and forward integration by expanding its operations over the supply chain in two primary ways. Firstly, Kyosk has rebranded its internal product, uLima, as KyoskFarm, to broaden the reach of KyoskFarm beyond Kenya. The primary goal of KyoskFarm is to enhance farmers’ productivity and yield. “We are helping farmers access services such as fertilizer, credit, and micro-insurance, among others,” said the CEO.

Secondly, Kyosk also announced another product, KyoskFresh, which will market the farmers’ output. “KyoskFresh will be key to getting produce from farmers to commercial kitchens, local eateries, and kiosks that sell fresh produce,” clarified Afaedor to TechCabal.

Kyosk has acquired KwikBasket to leverage its expertise and network in sourcing produce from farmers and supplying it to commercial kitchens, thereby enhancing Kyosk’s operations in the fresh produce supply chain. This integration decision allows Kyosk to benefit from KwikBasket’s knowledge and connections, enabling the startup to strengthen its ability to source produce from farmers and supply it to commercial kitchens.

“We acquired them for that competence and have the function in-house. Kyosk is very good at operations, with 11,000 deliveries happening daily. We have been able to scale the business across 42 territories across four countries,” added the CEO.

How does this model differ from Twiga’s?

Kyosk’s business model is similar to Twiga’s. But there are three crucial differences. First, Kyosk primarily targets small-scale farmers, while Twiga focuses on commercial applications and services. Secondly, Kyosk extends its distribution beyond produce, covering other products for kiosks. For example, they plan to introduce the distribution of electronics and pharmaceuticals to dukas. Another notable difference is that while Twiga uses contractors as distribution and customer relations agents who are not full-time employees and can be dismissed for underperformance, Kyosk employs permanent agents.

“I won’t say that our model is the same as Twiga. We are focused on small-holder farmers and dukas, because what you find out is that 70% of agricultural produce from Africa is actually from small-holder farmers,” the CEO told TechCabal.

How has Kyosk funded the venture?

Kyosk admits it is funded but is not open to divulging financial details. “We have raised money, but we just haven’t been announcing. The details are internal for now, but I can tell you that we are arguably the biggest digital distributor across the continent,” boasted the CEO. Nonetheless, Kyosk’s biggest backers are ETG and Mitsui. The firm also has two other investors. Kyosk also purchased KwikBasket from TechnoBrain, which offers IT solutions.

Afaedor concluded, “This acquisition marks a major milestone for Kyosk as we broaden our footprint in the fresh produce market in Africa and enhance our offering to cater to the needs of farmers, retailers, kitchens, eateries, and other consumers.”