Every now and then, an idea surfaces that revolutionizes an entire industry or existing market. Netflix did it with the movie industry, Uber did it with the transportation industry, and here is our new startup, PartzShop, set to do it with the automobile industry in Africa.
In 2013, Nigeria spent 500 billion Naira on automobile spare parts and 150 billion Naira on the purchase of tyres. According to the Federal Road Safety Corps (FRSC), about 6.6 million and 10.6 million registered vehicles plied the roads in 2010 and 2016 respectively. This hints at the grand valuation of the automobile industry in Nigeria alone. The sector mostly comprises of manufacturing/assembly and sale of bicycles, motorbikes, cars and spare parts. With the number of cars that ply Nigerian roads now recorded at over 14 million, according to a recent PWC publication, it is no wonder that car-owners desperately seek out replacement of parts, therefore, placing the spare part industry as a multi-billion Naira market.
The spare part business industry is a unique organism that’s made up of numerous organizations, brands, characteristics, consumers, and channels. In Nigeria, this large market consists of Ladipo market in Mushin and Aspamda market, both in Lagos. Ladipo market is arguably the biggest (used and new) spare part market in Africa because Lagos has the biggest port on the continent. Major customers come in from Togo, Ghana and Sierra Leone. The Aspamda market focuses more on brand new parts.
There is one thing to note though, spare part sellers cannot function in isolation. There is an energy that comes from the community of part dealers that exudes trust to the customers. Which is what makes the PartzShop business model a unique one — out of all the startups that have tried and failed to penetrate the spare part market.
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Why will it work?
While it’s challenging for a single business to come in and disrupt an entire industry, it’s not impossible. All it takes is the right timing and execution.
It is also important to note that disruption is usually a perennial concern for business leaders, who worry that upstart rivals are on the verge of disrupting their business models and unsettling their industry’s equilibrium.
Speaking on the business model to adopt for PartzShop, Kingsley Eze, founder and CEO of Tenece Professional Services, says: “This business cannot work without the dealers in Ladipo.”
Therefore, earlier attempts to penetrate or disrupt this market with the model that stood to alienate the business owners and shareholders of this spare part market were largely unsuccessful. This reason alone accounts for a high percentage of the reasons behind their failure.
This is why PartzShop disrupts the market uniquely, not by creating a new market and value network, but by working hand-in-hand with the existing market to correctly automate it. Visionaries in Ladipo and Aspamda, who have refused to be overwhelmed by the fear of disruption, have partnered with PartzShop to be suppliers for the business.
The goal is simple — to cater to the needs of online shoppers wishing to have easier and more professional ways of accessing spare parts.
PartzShop was able to sense market complacency, customer frustrations, and tension points in the process, which are all key factors in disruptive innovation.
The business caters to a very niche clientele because 90 percent of the purchase of spare parts are made by repairers, and offers expert consultancy as well as auto-servicing mechanics to those who do not have much knowledge in the area. It, therefore, becomes a one-stop-shop for all things automobile.
Launched on June 20, PartzShop already has a valuation that is higher than most startups that have been on for years. This is because cracking this close-knit market and starting from Lagos is a win-win. Automating such a process as parts purchase and delivery is one to be celebrated by both the suppliers and the consumers. It also opens up a channel for expansion, growth, and allows conversation about the grey areas of the market.
Disruptive innovations tend to be produced by outsiders and entrepreneurs, rather than existing market-leading companies.
PartzShop is a startup offspring of Genesys Tech Hub, the biggest tech startup incubator and learning hub in the South East of Nigeria, and is powered by Tenece Professional services, one of the biggest indigenous tech companies in Nigeria.
This gives PartzShop the advantage it needs, as Genesys has funded over 6 successful startups, valued at thousands of dollars. Tenece is also a major contender in the IT world, with branches all over Nigeria and Ghana, partners including IBM and Oracle, and with over 100 loyal clients in all sectors.
This large partner and client base give PartzShop even more prospects, because though it is still in its adoption phase — trying to build a loyal user base— it is already in talks with Original Equipment Manufacturers (OEMs) for major brands such as Mercedes and Hyundai about partnerships.