Egypt-based B2B e-commerce platform, Fatura, aims to localise technology in the traditional trade sector, linking wholesalers and retailers on the one hand and wholesalers and companies on the other side.
The company aims to make its mark in 15 governorates across Egypt and include 30,000 retailers in its network within the space of two years, according to Founder and CEO Hossam Ali.
He said the company aims to form unions of wholesalers in each region to provide products at competitive prices to retailers, and achieve added value and increase sales.
This would be based on an artificial intelligence (AI) supported technological system that allows retailers to request their products at any time throughout the day.
This system would distribute the required products to wholesalers based on specific criteria, ensuring that the retailer gets the best price. This would, in turn, drive the wholesaler’s sales growth.
Ali added that the company aims to link wholesalers with financiers, whether banks or associations and financing companies to facilitate their access to financing. The move is designed to help them cover their future expansions, especially as they face challenges in providing financing from these bodies.
What is Fatura?
Fatura is a company that provides technology solutions to connect retailers and wholesalers on one side, and connect wholesalers, manufacturers, and companies on the other side through a limited platform for merchants.
The idea for the company came during my work at McKinsey, where statistics and data indicated that traditional trade represents a large proportion of emerging markets such as Egypt. The data also showed that a large proportion is not visible or parallel, such as groceries and kiosks, and this sector lacks regulation. This means that there is an investment opportunity in case technology has been localised here.
This type of trade represents more than 80% of the volume of Egypt’s trade market in terms of financial value, and about 98% of the market size as the number of sellers. There are more than 350,000 grocery stores, according to official figures, and the volume of trade in this market reaches about EGP 250bn, but some statistics indicate that this number has exceeded EGP 900bn.
Therefore, we decided to exploit this investment opportunity by using technology to regulate this market and create added value for all parties connected to it, “retailers – wholesalers, companies, and manufacturers”.
What services does Fatura provide?
We act as a technological link between wholesalers, retailers and companies. We are a virtual wholesaler based on forming unions of traditional wholesalers in separate regions, depending on the technology.
The wholesalers in the union are provided with technology to manage their sales and stores so that all data is available on the platform, both in terms of stock quantities for various commodities and prices. This helps them increase their sales and obtain products at more competitive prices from companies and manufacturers.
The platform offers the so-called “kashkool”, which is intended as a list of about 2,000 products, based on the supply of wholesalers in this region. Retailers would be able to request the products they want, while the system distributes the request for these products to the network of wholesalers participating in this “kiosk” using AI technology. This would depend on the size of the stock and the wholesale price, which guarantees good sales for all the merchants participating in the “kashkool”.
How is the database used in developing wholesaler sales?
According to the databases, we can identify the most requested items to direct the merchants to purchase larger quantities of them. We can also identify the items that are in demand and which the wholesaler does not provide, which helps him create a new opportunity and increase sales growth.
We also help merchants by connecting them with companies to obtain products at more competitive prices, because we allow orders in large quantities to be distributed to multiple merchants, instead of each merchant making the order individually, which makes the price higher.
We have been providing our services for nearly a year, and until now, all the wholesalers who work with us have achieved strong growth in their sales. Each of them has at least purchased one additional transport vehicle due to the increased demand for their services.
How many wholesalers are in Fatura’s network so far?
Currently we have 20 wholesalers in east Cairo, Heliopolis, Al-Tagamoa, Al-Zaitoun, Maadi, Ain Shams, and Al-Mokattam. Currently we are expanding our services to areas in west Cairo. Fatura represents 30% – 80% of the sales of the wholesalers who are members of the network.
What about retailers?
For retailers, it is an easy way to order the products they need at competitive wholesale prices.
The wholesaler usually offers about 200 items, while the retailer sells about 1,500 items, and therefore needs to contact more than five wholesalers to order the products he needs. Through Fatura, however, the retailer can buy all the products he needs from one place, and at a more competitive price than traditional wholesalers.
Fatura also gives retailers the flexibility to purchase their products at any time 24/7. Our statistics indicate that most retailer orders take place during the 22:00 to 02:00 time period, which means that this is the right time for retailers to order their products. If they are ordered them the traditional way, they would not find a wholesaler working at this time to book an order.
How do you ensure competitive wholesale prices from merchants who work in Fatura’s network?
Usually, there are two wholesalers who offer the same product to ensure the competitiveness of the price that we offer to the retailer. The model we provide depends on choosing specific wholesalers in each region to have a union that competes with traditional merchants.
This guarantees the competitiveness of the prices we offer and, at the same time, we provide added value to the merchants who are members of the network.
We also work to support small- and medium-sized enterprises (SMEs) that offer unconventional products. We buy these products from them at an acceptable profit margin, and then store them with the wholesalers cooperating with us and display these products through the platform to retailers. Then we sell them ourselves and we share the profit with wholesalers in exchange for the storage and delivery process.
How do companies benefit from your solutions?
Through the database, we can provide real and detailed figures on market sales to companies. Through the sales that take place between the wholesaler and retailer, we can provide companies with reports on their market shares, the most requested products, and the products the market needs.
For example, reports prepared by Fatura showed that the demand for products increased threefold the day after the Prime Minister’s decision to suspend schools as part of precautionary measures against the novel coronavirus.
We were able to provide detailed numbers for the products that were in high demand, whether the type of product, the size of the package or other detailed information.
So far, we have cooperated with several companies such as Doha and Big Cola. We are also working on creating cooperation with many major companies over the upcoming period.
How does Fatura make profits?
There are various sources to achieve profits, including the products that we buy from small companies and resell. We also provide market reports for companies, and we get commissions from wholesalers in exchange for the technological solutions we provide to them.
We also aim to be the platform that provides financing to wholesalers in cooperation with banks and finance companies, which will represent another way for making profit.
What are your plans to expand in the coming period?
We are pumping the investments that we have obtained and the profits we achieve in expanding our services. We plan to spread to the Delta and the Suez Canal areas during the coming period.
We also plan to attract about 10,000 retailers within a year, and include 30,000 retailers in 15 governorates within two years.
The company is looking to expand outside Egypt, and there will probably be markets in Africa, such as Kenya and Nigeria.
Recently, we have obtained more than $1m in financing from the Disruptech, Cairo Angels, and Egypt Ventures, and we aim to collect new financing in the coming period.
Do you have plans to provide electronic collection services?
Currently, money is collected in cash, but we plan over the upcoming period to make the collection process electronic through Fatura’s network. This will make it an integrated platform between wholesalers and retailers for ordering and payment.