The persistent supply chain shortages we’re seeing across the economy are disproportionately affecting small businesses, who are often last in line for products behind big companies like Walmart and Amazon. How can small businesses possibly compete in this bidding war?
Here’s one answer: The Convoy is a Raleigh-based B2B startup that leverages the group-buying power of small businesses to connect them to vendors and deals. It’s kind of like Groupon but for independently owned businesses, said Co-Founder and CEO Yasin Abbak.
Abbak said he’s building the business he wished his father had when he immigrated to the U.S. from Turkey in the mid-1980s. Abbak’s father, Mithat Abbak, came to pursue the proverbial American dream but mostly just fought to keep his small businesses alive. Mithat was previously the owner of a lunch truck and pastry distribution business—which a teenaged Abbak ran deliveries for—and is now the owner of both a car dealership and auto repair shop.
“The sad part about that is that it’s a very typical immigrant story,” Abbak said. “It’s nothing special. It’s always a constant struggle to run your own business, especially when you don’t have the economies of scale or power of a large organization behind you.”
When a vendor has to choose whether to sell to a big company or to several small businesses, they tend to choose the former because it’s less work to manage one deal. On The Convoy, small businesses are grouped together and treated as one deal, thereby making it more efficient for vendors to sell to small businesses.
Abbak sold his previous company, Fantasy Life, in May of this year to focus on The Convoy. Fantasy Life, a platform for sports betting, was acquired by the media and technology company Betsperts. [We profiled Fantasy Life in July, 2020.]
The Convoy is a continuation of Abbak’s first company, Paired Media, which leveraged the group distribution power of independently owned restaurants to give them free items. Paired Media increased the profit margins of restaurants through reducing or eliminating expenses for certain supplies such as coffee cups or pizza boxes.
Increasing the profit margins of small businesses, particularly restaurants, gives a boon to the local economy. Over 50% of the revenue generated by an independently owned business gets recirculated back into the economy, compared to about 12% for big businesses. For small restaurants, the percentage that gets recirculated surges to about 78%, compared to 30% for large chain restaurants.
“By empowering small business owners, who tend to be the underestimated underdogs, it’s incredibly good for redistributing wealth across the country by keeping money in the hands of the local communities versus being siphoned out and into the hands of the larger organizations and corporations,” Abbak said.
Here’s a blog post from The Convoy describing its mission in greater detail.
It’s free for businesses to use The Convoy to find deals. The startup only makes money when they actually save money for businesses, Abbak said. For instance, if they negotiate a 20% discount from a cell-phone provider, they’ll take a small portion of it for themselves and leave the rest of the discount to the businesses.
This year The Convoy conducted a pilot launch with 25 Chamber of Commerces around the country, mostly in the Northeast, Abbak said. They are currently looking to fill more spots for their bigger pilot launch in January. While most of the 35 pilot customers so far are Chamber of Commerces, the MVP will be open to any type of small business, including service providers like lawyers, accountants and insurance brokers, Abbak said.
Down the road, The Convoy will be re-designed to focus on serving specific needs of an industry, but first they want to use the upcoming pilot launch to decide which industry to focus on.