Biography:
Samer Choumar is the co-founder & CEO of z.systems, a Moroccan startup transforming the country’s traditional retail ecosystem. On the Z app, FMCG brands can open their own branded stores, and Moroccan traditional retailers can order from it. Z connects with third-party distributors to take care of deliveries.
Z closed a $1.5M seed round at the end of 2024. MNF Ventures, Witamax, CashPlus Ventures and Kalys Ventures participated in the round. Other co-founders include Meriem Benabad, Youssef Haddouch and Reda Nebri.
Prior to Z, Samer worked at BCG and was co-founder & CEO of a tech-enabled hospitality startup in Saudi Arabia. He holds an MBA from Columbia Business School.
Startups digitizing traditional retail are numerous. In Africa, one thinks of Chari, Wasoko & MaxAB (which have merged),…How is Z different?
Startups digitizing traditional corner stores have raised millions in funding, from Morocco, to Saudi, to the Philippines, to Mexico. It’s clearly a compelling vision for VCs.
Many of these startups ended up becoming digital wholesalers. The only disruption they brought was enabling retailers to order products from an app, but startups handled procurement and delivery. Often, the unit economics didn’t square. The cost of receiving, fulfilling and delivering an order was higher than the razor-thin margin startups made on that order. The problem with negative unit economics is that the more you sell, the more you lose money.
We noticed this first-hand at Z. Our founder & COO, Meriem, founded Awal in April 2022, a classic ‘digitizing retailers’ play here in Morocco. Her conclusions from Awal were two-fold.
First, it is possible to achieve high digital adoption from these retailers. They are happy to order online. Second, and the more unfortunate conclusion, is that your OPEX is higher than your margin. That was despite Awal’s efforts to reduce delivery costs as much as possible. It’s a model that’s bound to break.
Meriem also realized that once you start offering over 700 SKUs, the business becomes a quagmire to manage. You need a centralized purchasing team, warehousing operations… All things that add to your OPEX and push your already negative unit economics down even further.
How is Z an evolution of those conclusions?
Z’s answer is to delegate the complexity and the OPEX to the market.
We enable large FMCG brands (think Nestle, Unilever) to open their own digital stores on the Z app. They can customize their catalogue, adapt their pricing per geographic region, connect with fulfillment partners who take on deliveries…
Z takes care of onboarding small retailers, who then order from these digital stores. This plays into our strength: Awal proved that it could get retailers to adopt a digital solution. Today, 74% of Z’s GMV comes from retailers doing autonomous orders through the app.
RO insights: turning OPEX into revenue
To make its model work, Z is offloading its OPEX. Other adjacent startups take a different route, turning what used to be OPEX into a revenue line.
In the Philippines, GrowSari took time and money to build a distribution arm, which it then monetized. Here’s how co-founder Shiv Choudhury explains:
“We took a contrarian route, focusing on excluded sari-sari stores. This is harder and requires intense supply-chain reinvention. Ultimately, this exclusive reach gives us leverage with FMCG giants. If a FMCG player knows we’re the only ones to effectively reach certain stores, we can ask for higher margins.
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The same trucks that deliver our goods can also deliver other companies’ products. Think about a small drug store chain wanting to send goods to their franchisee outlet. Our truck is already going in that direction, so we can take that store’s product as well and cut their delivery price. Tranko [ED: what that service is named] is around 5-8% of our revenue and 10% of our operating margin.”
Excerpt from GrowSari: digitizing cornerstores, originally published in The Realistic Optimist
How do FMCG brands usually sell to these small, traditional retailers?
In Morocco, modern trade (ie: supermarkets) is still in the minority. The vast majority of Morocco’s retail market runs through small, independent retailers called “hanouts”. In other words: brands are obliged to sell through them.
It’s too complex for brands to handle relationships with each individual hanout. So they go through wholesalers, who have built their own relationships with these hanouts. These wholesalers are old-fashioned: they operate mostly in cash, are relationship-based, aren’t super efficient, and aren’t very aggressive when it comes to pushing products into the market. To get their brand out there, brands would also send teams of physical salespeople to pitch their products door-to-door, to each individual hanout. Those costs creep in their margins.
That’s why brands prefer to sell to Morocco’s burgeoning modern trade (Marjane, Carrefour). Even though their margins are lower (since these supermarkets have more bargaining power), they get more visibility on where and how their products are being sold.
Z transforms the role of the wholesaler into a fulfillment service provider and bypasses the need to send door-to-door salespeople. Z takes care of putting the app in the hands of thousands of hanouts around the country, and brands can sell to them directly via their digital store.
Z then puts them in touch with “Uberized” delivery drivers, who aren’t on payroll, but who earn commission per delivery. This incentivizes the drivers to be efficient and get their job well-done, because they don’t get paid per time on the job. They want to finish their deliveries for the day and get home to their kids. On the contrary, a driver on payroll isn’t incentivized to be efficient since they’ll get paid at the end of the day regardless.
To answer your initial question: the difference between Z and the other players you mentioned is that Z is a full-tech play, whereas most other players are tech-enabled plays.
Where is Z today?
We launched the first version of our app in November 2024. It was a Tinder-like game, where hanouts could swipe left-right to indicate which products they had in store. This rendered extremely helpful data for brands.
With over 10,000 users onboarded without any paid marketing, the app is now deeply embedded in traditional retailers’ daily routines. In exchange for doing that “digital inventory”, retailers receive “Z Coins” which they can redeem by ordering from the app.
In late April, Z introduced its B2B marketplace (on an invitation-only basis), enabling hanouts to buy directly from brands’ digital stores. Adoption is picking up. So far, 25-30 brands have opened their own digital stores (or are in the onboarding process). 1,200 hanouts have been onboarded. We have really good week-on-week growth so far.
We’ve also launched Catalogue Solidaire, which provides 10% cashback to recipients of Moroccan social aid payments. Users have a Z physical card, can add money to it at participating payment establishments, and receive 10% cashback on purchases they make at Z stores (from brands that signed up for the Catalogue).
Internal Z slide
Where do you predict most of your revenue will come from?
Our core revenue driver will be commissions (which brands pay) from orders purchased through the marketplace.
RO insights: margins depend on the products you sell
B2B e-commerce startups’ margins are also influenced by the type of products they sell.
Here’s how Jessica Long, who co-founded a similar startup in Senegal, analyzed some of her competitors’ struggles:
“ We found their prices to be too low and they focused on selling commodities, which sport lower margins (oil, rice, etc…). Their reliance on commodities drove good early GMV growth, but seems to have hindered their expansion into higher-margin products: tomato paste, mustard, pasta, vinegar… Processed products with lower selling volumes. We think they also expanded too fast, quickly opening a second warehouse in Thiès (another large city) without nailing Dakar first.”
Excerpt from Maad: B2B e-commerce in Senegal, originally published in The Realistic Optimist
You shared a deck with me, in which you mention a “BNPL play”. Can you elaborate?
In Morocco, many low-income households rely on informal credit from their hanout to meet basic needs. These hanouts often act as the de facto lenders of last resort, extending credit throughout the month and getting repaid when customers receive their income.
But this model is unsustainable. For hanouts, extending credit drains working capital and limits their ability to restock or grow. At the same time, their most loyal customers are drawn away by promotions in modern trade outlets, while still depending on hanouts for short-term credit. It’s a lose-lose for hanouts.
Z’s BNPL solution aims to flip this equation. The Catalogue Solidaire is the first step: Moroccans receiving social aid payments now have a Z card, and receive cashback on certain transactions. In the future, we could allow people with Z cards to buy on credit, since we know they have a guaranteed social aid payment coming soon.
It’s a win for retailers, who regain liquidity and customer loyalty, and a win for consumers, who gain dignified access to essentials on flexible terms.
RO insights: an "asset-light" approach to BNPL
In Venezuela, the local credit card industry was battered by currency depreciation, combined with a limit on interest rates.
Imagine I lend you 100 bolivares. By the time you have to pay me back, that 100 bolivares is worth 5000 bolivares. But I can’t charge you more than 20% interest, so all I can get is 120 bolivares back. That kills any incentive for me to issue credit cards.
Cashea swooped into this void by offering BNPL to credit-deprived Venezuelans. But Cashea operates in Venezuela, so it struggled to raise money. It found a way to offer BNPL without having to advance the money itself.
Here’s how Pedro Vallenilla, one of Cashea’s co-founders, explains:
“The pitch to merchants is relatively simple. Having a BNPL option generally renders higher basket sizes, which justifies our commission. And for buyers, the pitch is powerful: buy now what you can pay tomorrow, with no interest.
Many were initially skeptical. When a merchant uses Cashea’s BNPL option, they get paid in installments as well. They don’t get paid the full price of the purchased product.
We had to convince stores to trust that Cashea would step-up if customers didn’t pay. Merchants had legitimate concerns about the quality of customers using Cashea and their ability to pay their installments. The whole concept of lending with scarce information and no collateral to low-income consumers was unsettling.
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Objectively, we have very little information on first-time borrowers. We approve a large amount of users (85%) but unlock very small amounts of credit to start (between USD 50 and USD 200).
Users are rewarded with higher credit limits and lower down payments by diligently paying installments on time, every time. We give users double points if they repay 5 days before the due date. When it comes to credit scoring someone, there’s no better metric than repayment consistency.
We have other variables mixed into our credit scoring algorithm. But we primarily focus on getting a lot of people in the system, to collect data we can’t access if they are outside the Cashea ecosystem.
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As we’ve cemented our brand and maintained low NPL ratios, this worry has dissipated. Once we gained momentum, we were overrun by merchant demand. ”
Excerpt from Cashea: BNPL in Venezuela, originally published in The Realistic Optimist
What’s Z’s biggest unit economic challenge?
We have a couple of things to be cautious about.
We have to make enough commission (in Moroccan dirhams) to cover our tech costs (which are often in $USD), for tools such as AWS, Github… Simultaneously, our commission has to be low enough to attract early adopters to the marketplace.
It’s a classic chicken-and-egg problem, where we need to concurrently build exciting mass for both sides of the marketplace. We have an advantage there, since we’re coming in with the thousands of retailers that are already using Awal.
We’re often misconstrued for a classic “traditional retail digitalization play”, which has burned many investors who didn’t see the financial returns they wanted. This makes fundraising a bit harder.
What about the end consumers? How do they play in all of this?
They’re the third pillar of Z’s ecosystem. If we can get customers’ phone numbers, we can potentially enable brands to launch loyalty programs with hanout consumers directly, something which they couldn’t really do until now.
Z also has a loyalty program with customers, who could get Z coins every time they make a purchase at one of our partner hanouts. They could then redeem those coins on specific products, which we could promote through what we call our “Z leaflet”. These promotions would enable hanouts to compete with the discounts offered by modern trade outlets.
What do foreign investors misunderstand about the Moroccan startup scene?
A lot of VCs are unfamiliar with Morocco’s francophone business environment and the way regulation works here. The Moroccan government cares a lot about stability and as a result, local regulations can slow down VC closing at times. But understanding some operational granularity gives you an edge. For example, many Moroccan startups incorporate in Delaware (Z is incorporated in Delaware) to get the best of both worlds.
The Moroccan ecosystem lacks visibility internationally. Its funding numbers, compared to Saudi, are minuscule. But those small numbers shouldn’t be misconstrued for a lack of startup activity. There’s a lot happening here, a lot to build, and many conversations going on.
The Realistic Optimist’s work is provided for informational purposes only and should not be construed as legal, business, investment, or tax advice.