MENA Food Retailers Tap Tech to Improve Supply Chain Inefficiencies

In Egypt, small firms, including mom-and-pop stores, make up about 90% of local food and grocery sector, with the “Walmarts and the Walgreens of Egypt only representing a very tiny portion of the market,” says Belal el Megharbel, co-founder and CEO at Cairo-based business-to-business (B2B) eCommerce startup MaxAB.

But despite the significant size of the small- and medium-sized business (SMB) market, the sector has been plagued by a fragmented supply chain with multiple layers of distributors and wholesalers in between causing major inefficiencies and negatively impacting SMB bottom lines.

It’s a problem MaxAB, which serves over a third of the grocery stores in Egypt’s capital city, has been looking to solve since it launched three years ago, offering merchants a tech-enabled order and inventory platform complete with a network of warehouses and fleet of vehicles that can deliver food products in less than a day.

“The magic happens from the data we collect from the user journey [in our app]. We use that data to predict demand and [then] use that demand prediction to build buffers of inventory that allows us to be reliable,” el Megharbel told PYMNTS in an interview.

He added that they’ve built technology tools that help with route optimizations for vehicles as well as picking and sorting logistics in “messy warehouses that are not as equipped as you would [expect].” This has all contributed to helping the startup deliver goods in less than 24 hours at a reasonable and affordable price for their SMB clients.

Related: B2B Marketplace MaxAB Raises $40M for MENAP Expansion

The company has also expanded its offerings to include FinTech services aimed at digitizing cash flow within the cash-heavy local food supply chain.

As such, the firm has equipped merchants, most of whom still choose to pay cash on delivery, with the technology that allows them to offer bill payment services to their customers.

As el Megharbel explained, “[Anybody] can pay their electricity bill [or] their telecom bill at the convenience of the grocery store,” but for merchants to offer this service, first they have to top up their e-wallet. Beyond that, by enabling small retailers to use those funds to buy inventory, MaxAB has helped to increase electronic payments within the SMB ecosystem.

And once the startup ventured into the FinTech space, it was only a matter of time before the platform introduced a credit solution — a common trend seen among African B2B marketplaces.

“The main KPI [key performance indicator] we optimize is the bottom line of the merchant,” he explained, adding that, “We’re now issuing four-day loans and seven-day loans that allow [a merchant] to buy more inventory, without having to go through the normal banking cycle which can be quite tedious.”

The same rationale that led the platform provider to introduce bill payment services can also be observed in MaxAB’s recent partnership with Amazon, a deal that enables merchants to act as delivery agents for the eCommerce giant.

As part of that agreement, MaxAB leverages its own distribution network to deliver parcels to local shops, which are then responsible for handling last-mile distribution.

B2B Leads Egypt’s Digital Transformation

With the growing adoption of MaxAB and other B2B platforms in the digital supply chain space, older and inefficient B2B supply chain models seem to be declining in popularity.

See also: Food Brands Tap Digital Supply Chain Platforms to Streamline Logistics

“Digital adoption in the B2B space, actually surprisingly, is happening way faster than the B2C [business-to-consumer] space,” el Megharbel noted, adding that merchants can increase profit margins and achieve greater operational efficiency by migrating to tech-enabled eCommerce platforms.

He went on to add that the platform model also makes more business sense for manufacturers and suppliers because distribution becomes much more efficient, unlike in pre-digital supply chains, where consumer goods are distributed by delivery drivers who move aimlessly from shop to shop without any idea of which merchants need a particular stock.

MaxAB on the other hand, aggregates stock from multiple suppliers in its warehouses and can distribute a variety of products in a single trip, already knowing which retailers need what stock.

At the end of day, it all boils down to the quality of the data gathered, which according to el Megharbel has enabled them to move beyond simply making stocking and pricing decisions to creating a unique offering for their customers.

Basically, the data gave MaxAB insights into which specific stock keeping units (SKUs) were out of stock most of the time, after which the firm connected with manufacturers to produce those SKUs and then they leveraged their distribution network to distribute them to clients.

As el Megharbel said: “The real magic happened when we started using that data to also build our own private label goods.”

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