Everything You Need To Know About Onchek
Chekwas Okafor started OnChek.com originally as an African Luxury e-commerce platform, growing it into one of the leading retailers of African luxury fashion brands like Zashadu, Ziva Lagos and Zephans & Co. But in 2018, after making a line of t-shirts inspired by the Super Eagles, he realized there was a bigger opportunity in the local mass market.
He decided to switch focus into manufacturing clothes locally. Before all this, Chekwas had worked over seven years in manufacturing, which spans different industries in the United States - Fiberglass manufacturing (Heavy Duty), Personal Care (Consumer Products), and pharmaceuticals, and a lot of that experience helped him pivot.
Onchek’s vision is to make high-quality plain T-shirts accessible to the Nigerian mass market. To achieve this, the company has built a high-speed, low-cost manufacturing operation, making plain t-shirts for the mass market with all inputs sourced 100% from Nigeria.
The founder leveraged his experience in manufacturing to design a process for quality control, production speed, and productivity rate that is 10X more efficient than the country average, ensuring that he makes shirts cheaper than the competing imported brands.
Since launch, Onchek has manufactured and sold approximately 1.5 million t-shirts...
One of Onchek's most significant achievements is its commitment to a fully Nigerian supply chain. From cotton sourcing to production and distribution, OnChek is deeply rooted in the local ecosystem. By doing so, it has contributed to local job creation and helped foster economic growth within the country.
Quality and affordability are the cornerstones of OnChek's success. It recognises the importance of offering T-shirts that meet international standards while remaining affordable for the Nigerian market. This dedication to excellence has garnered them a loyal customer base and set a new standard for T-shirt quality in the region.
Since its inception, OnChek has produced over 1.5 million T-shirts. This remarkable achievement is a testament to their commitment to efficiently and effectively meeting the Nigerian market's demands. With a staff strength of 200, OnChek is producing T-shirts and providing employment opportunities, contributing to the country's socio-economic development.
OnChek's journey from being an e-commerce platform to a pioneering T-shirt manufacturer with a 100% local supply chain is an inspiring tale of resilience, innovation, and dedication. As it continues to shape the textile industry in Nigeria, it remains true to its core values of quality, affordability, and community engagement.
In a world where "Made in Nigeria" stands as a symbol of pride, OnChek has shown that homegrown businesses can compete globally while staying committed to their roots. With their vision and determination, OnChek is not just making T-shirts but weaving a new narrative for Nigerian manufacturing.
As they continue to evolve and grow, it will be exciting to see how OnChek's journey unfolds and how they continue to make their mark on the fashion industry, one quality T-shirt at a time.
Market Potential
Thanks to its large and growing population, the Nigerian market presents a compelling opportunity for OnChek, which exhibits substantial demand for basic and luxury clothing. The local production of garments and T-shirts in Nigeria falls significantly short of meeting this burgeoning market demand, resulting in increased reliance on textile imports and smuggling through illicit channels. Notably, despite restrictions, textile and fashion accessories imports escalated from $84 million in 2015 to $159 million in 2019.
Over the past five years, Nigeria has incurred an estimated loss of 197 million USD due to production inefficiencies and supply chain challenges within the textile industry. Given Nigeria's overwhelming demand for fabric and T-shirts, OnChek is poised to capitalise on this untapped market segment.
On a broader scale, the global textile industry boasts a staggering worth of over $920 billion, projected to $2.25 trillion by 2025 at a CAGR of 4.4%. Within the Sub-Saharan region, the fashion market is valued at $31 billion, with the Nigerian fashion market accounting for 15% (equivalent to $4.7 billion). Projections indicate that this market is poised to expand to $6.25 billion by 2025, reflecting a CAGR of 5.5%. These statistics underscore the immense untapped potential that OnChek can harness within the Nigerian fashion market.
Financial and Operational Performance
OnChek has showcased remarkable financial and operational resilience, demonstrating exceptional performance despite the challenging economic conditions prevailing in the country. Since implementing backward integration strategies in 2019, the company has achieved cumulative earnings of 3.3 million USD. Notably, in 2022 alone, OnChek achieved revenue exceeding 1.3 million USD and is projected to achieve over 12 million USD in revenue over the next 5 years.
This impressive performance is further highlighted by the company's robust revenue Compound Annual Growth Rate (CAGR) of 56% over a four-year period and a commendable gross profit margin of 15%. Additionally, OnChek boasts a substantial monthly production capacity of 43 metric tons (MT) and maintains a presence through six major distributors across Nigeria, serving all 36 states in the country.
Competitive Advantages
OnChek's competitive advantages in the market stem from its unique sourcing strategy and efficient production processes, resulting in lower prices for its T-shirts. These advantages set OnChek apart from its competitors, many of whom face challenges in sourcing and importing raw materials and finished goods.
OnChek's ability to access locally sourced raw materials is a significant differentiator. By sourcing fabric materials from local suppliers available within the country, OnChek reduces its dependence on international suppliers. This local sourcing minimises the impact of foreign exchange fluctuations and supports the local economy. It can also lead to faster production turnaround due to reduced shipping and import lead times.
OnChek's efficient production processes contribute to its competitive edge. These processes could include streamlined manufacturing, optimised supply chain logistics, or automation that reduces labour costs. An efficient production process that results in cost savings is passed on to customers through lower-priced T-shirts.
Many of OnChek's competitors import raw materials or finished goods from international suppliers. This exposes them to various challenges, including foreign exchange rate fluctuations, dependence on international suppliers and import duties. These restrictions significantly increase their production costs and, consequently, the prices of their apparel.
Challenges
Despite OnChek's initial rapid growth, with a remarkable 56% CAGR between 2019 and 2022, the company faces challenges in its supply chain and working capital management. These challenges have constrained OnChek's ability to sustain its scaling efforts. While the company possesses a highly efficient production line capable of manufacturing 180,000 T-shirts monthly, it is experiencing a suboptimal utilisation rate of only 57%, primarily due to the aforementioned supply chain and working capital constraints.
Furthermore, while OnChek benefits from a loyal customer base that provides advance payments, this practice has inadvertently limited the available capital for expanding operations and capturing a larger market share. Additionally, OnChek faces supply challenges in the local market, with the local supply of required input fabric meeting only 46% of the company's monthly production capacity. These fabric supply issues have led to lost sales and clients, with an estimated impact of N250 million in 2022.
Growth Strategy
In response to the challenges and bottlenecks faced, OnChek has devised a comprehensive growth plan to address these issues strategically. This plan unfolds in three distinct phases, each enhancing the company's position within the local value chain. To support these growth initiatives, OnChek is actively seeking capital infusion. Here are the details of each growth phase:
Phase 1 - Backward Integration:
The initial phase of OnChek's growth strategy focuses on furthering its backward integration efforts. Specifically, the company intends to delve into the knitting and dyeing segment of the value chain. This strategic move is driven by the need to rectify the fabric supply gap that has been a key bottleneck in its operations. By expanding its presence in this segment, OnChek aims to secure a stable and reliable source of fabric while simultaneously increasing the utilization rate of its facilities.
Phase 2 - Factory Expansion:
In the second phase, OnChek plans to expand its cutting and sewing factory. This expansion is geared toward significantly boosting T-shirt production capacity. Moreover, it represents a pivotal step in the company's broader objective of diversifying into other ready-to-wear apparel categories. The expansion of the factory will not only cater to increased demand for T-shirts but also position OnChek to tap into new market segments within the fashion industry.
Phase 3 - Scaling Knitting, Dyeing, and Cotton Cultivation:
The third and final phase of OnChek's growth strategy centers on expanding its knitting and dyeing operations. Additionally, the company aims to facilitate local cotton cultivation through Out Grower schemes. This multifaceted approach seeks to address supply chain issues from both ends. OnChek aims to achieve greater self-sufficiency in fabric production by scaling up knitting and dyeing operations. Simultaneously, fostering local cotton cultivation bolsters the domestic supply of raw materials and aligns with the broader goal of promoting local agriculture and sustainability.
In summary, OnChek's growth plan is a strategic roadmap that aims to overcome current challenges and position the company for sustainable expansion and success within the textile and fashion industry. To execute these ambitious phases effectively, OnChek is actively seeking the necessary capital infusion to fuel its growth initiatives and further strengthen its position in the market.
