With a population of 100 million, Egypt’s food and retail market stands at an estimated $45 billion and is still yet to reach its full potential. With the vast majority of its grocery sector still relatively informal and a number of inefficiencies in its supply chain yet to be corrected, there is ample room for startups to capitalise on gaps within this market.
One of these is Cairo-based B2B ecommerce start-up MaxAB, who are building connections between food and grocery retailers, and Fast Moving Consumer Goods (FMCG) suppliers. Not only have their team developed an app for store owners to purchase goods, an app has also been created for their delivery fleet, and another for its customer support team. MaxAB are aiming to reach 50% of Egypt’s population within the next two years, and having recently secured the largest amount of seed funding raised by a MENA based start-up, they are well on their way.
The company’s CEO Belal El-Megharbel is no stranger to the intricacies of business in the MENA region. Prior to founding MaxAB, he had a flourishing career at Careem where he transformed Egypt into the ride-hailing app’s most prominent market.
I spoke with the company’s CEO about their plans for the future.
What are you trying to achieve with your company?
We’re bridging the gap between traditional retailers and FMCGs. Traditional retailers make up 90% of this industry and the vast number of intermediaries are making a big dent in profit margins. They face a number of issues including limited access to FMCG promotions, poor quality of product range and the hassle of dealing with multiple suppliers. This needs to change.
Our vision is to organize the food and grocery ecosystem using technology. We want to provide the right amount of food to the right place and at the right time. To achieve this, we need to provide an end-to-end supply chain solution that uses data and technology to maximize efficiency.
You’ve spoken previously about Egypt’s fragmented food and retail market. How exactly is MaxAB working to combat the challenges using technology?
Currently, the B2B grocery market is offline from beginning to end. There are no optimization tools to ensure that it is running efficiently and no direct connection between FMCGs (brands) and retailers. What this means is that there’s a huge gap in the market for reorganization using technology.
The technology we’re building is geared towards boosting efficiency throughout the entire process, which means we help with economics, logistics, and even warehousing. Our technology provides automatic promotions to ensure that they are a strategic fit, integrating with route optimization tools, and automating purchases to ensure low inventory Days on Hand (DOH).
For the retailer, the app allows them to place their orders on-demand and not wait for the FMCG trucks to pass them by, they can also access brand promotion schemes. The retailer then receives the order consolidated in one truck. Nonetheless, given the data we collect over time on the retailer, we are then able to offer them access to credit facilities that were previously unavailable.
For the brands, our technology gives them real time demand monitoring and also the ability to control their prices and push segmented promotions.
Your team has a wealth of experience, having worked with a number of international transport, logistics and e-commerce businesses, Why did you choose to begin operations in Egypt?
Besides being my home country, Egypt has a young population and is full of problems to be solved. In my view, the bigger the problem, the bigger the opportunity.
The traditional grocery sector here is worth $45bn which is quite massive. After speaking to several food suppliers and local grocery stores, we realized how unconnected they were and that they both needed a solution. We were looking for Egypt’s most complex problem to solve, one which provided a lot of room for optimization using technology. There was no bigger opportunity than the B2B grocery sector so we started MaxAB to fix this.
MaxAB has enjoyed a great amount of success in a very short amount of time, recording fifty percent month on month growth is quite the accomplishment. How have you managed to achieve so much since you started in 2018?
Previously, nobody had serviced retailers in Egypt before and brands were selling products to them without a carefully thought-out structure. As we tried to sell our services to retailers, we learned a lot about the industry. Firstly, the market is extremely fragmented and multilayered with access to data very limited and inaccurate. Secondly, the sales teams of FMCGs and wholesalers placed the orders directly but made no connection with retailer consumption patterns. The FMCGs did not know much about how the retailer behaved and reacted to various market trends.
By placing the power in the hands of the retailer, we were in a unique position to understand how the retailer behaved and have been able to build our strategy accordingly.
You have secured $6.2m, one of the largest seed funding rounds in MENA history, How will these funds help you to reach 50% of Egypt’s population within the next two years?
This investment round will allow us to accelerate our growth plans and develop new products and services throughout North Africa. We’ll also use the funding to further enhance our technology and data science capabilities and boost recruitment across our key divisions to strengthen the business at its core. Lastly, we’ll be expanding geographically to cover all the under-served markets in Egypt.