With a population of 100 million and an outlet base of 400,000, servicing Egypt retail market is not an easy task. Small groceries dominate the fragmented retail sector, and modern trade only accounts for 10% of total sales. With a young growing population and a developing economy, the $45bn traditional trade sector has good growth potential.
Digital platform connecting small groceries
Cairo-based business-to-business (B2B) ecommerce startup MaxAB, plans to transform Egypt’s growing but fragmented retail sector. The startup has built a digital platform, connecting grocery retailers with consumer goods companies — improving supply efficiency and creating visibility in traditional trade. Its Android app allows retailers to place an order on-demand and receive delivery within 24 hours.
MaxAB was founded in 2018 by Belal El-Megharbel and Mohamed Ben Halim. Before taking on Egypt’s grocery sector, El-Megharbel was an executive at Careem, the prominent Middle East ride-hailing app.
They service 9,000 retailers and stores 680 products and has a fleet of 60 trucks and a large centrally located warehouse in Cairo. According to the company, they currently stock three to four days of “just-in-case inventory” to deal with the uncertainty of traditional trade.
Fragmented retail challenges
Egypt’s fragmented grocery market provides very little price visibility in the market. Goods often pass through six to seven layers of intermediaries. Long supply chains are not only a hassle for shopkeepers, but it’s inefficient, making a big dent into razor-thin profit margins.
Small groceries in Egypt are mostly not in direct contact with consumer goods companies and work through distributors and wholesalers. They are generally underserved, and face many challenges, including limited access to promotions and product assortments, and often suffer from poor product quality.
Not all small groceries receive deliveries, but only higher volume outlets that quality. Often distributors tie them to a weekly delivery schedule, and in many cases they can’t order products on-demand. As they have limited capital and cash flow, they regularly have stockouts, and in many cases require top-up services.
Egypt’s traditional traders are mainly untouched by technology, and there are no platforms connecting retailers with consumer goods companies. FMCG company software, is mostly not linked to distribution partners’ data in traditional trade. It often leaves them in the dark, with limited insights and data analytics to study customer trends and buying patterns.
Efficiency and improved business intelligence
B2Bs can bridge the gap between traditional retailers and consumer goods companies. MaxAB end-to-end supply chain solutions, can improve supply chain efficiency and ensures products are available at the right place and at the right time.
Small groceries have access to a wide variety of products and promotions. They can order products on-demand and don’t have to wait for scheduled deliveries.
For consumer goods companies, MaxAB’s business intelligence tools provide a window into small retailers buying patterns and preferences. Companies can improve their forecasting and tailor their product offerings and promotions for small groceries.
Future prospects – Egypt and beyond
MaxAB recently secured $6.2m seed funding and plans to accelerate growth and broaden their data analytics services. They are also exploring credit and working-capital financing. Considering the data the company collects, they can create a paper trail for small groceries, and provide access to much needed credit facilities.
The startup wants to enlarge its footprint in Egypt, and plans to reach 50% of the population within the next two years. The company is eyeing other North African markets. But for now, Egypt’s traditional trade is the prize.