Following Egypt’s rigorous economic reform program that was announced in 2016 and the floatation of the Egyptian pound, a significant price hike took its toll on almost all local and imported products.
Brimore, an end-to-end Egyptian distribution platform founded in 2017, wanted to fill the gap that imported products would leave on hypermarket shelves by offering locally manufactured, high-quality products. Recently, the startup raised $800,000 in a seed funding round.
Business Forward met with cofounder of Brimore Ahmed Sheikha to delve into how the company is minimizing the distribution value chain of medium-sized, local manufacturers in Egypt and which gap it is filling.
What is Brimore?
Brimore is a distribution platform on which local manufacturers – with high quality products – list their products. These products are noticeably diverse – they include perfumes, makeup, canned foods, detergents, bed sheets or even socks. Instead of being exhibited on hypermarket shelves, the products are given to an interconnected team of over 7,000 women across Egypt who distribute them among their local network, turning into points of sale and sales agents.
Hence, manufacturers get the chance to directly sell their products to consumers. To increase the reach and distribution of these products, Brimore uses multiple communication channels to engage with their consumers, such as a mobile application and a WhatsApp messaging service. The monthly portfolio of the products and discounts that are being offered is then sent to consumers through these channels.
Why would manufacturers move away from hypermarkets?
In order to understand the need for Brimore, it is essential to look at the relationship between local manufacturers and hypermarkets in Egypt. The manufacturer cares about selling and profiting, Sheikha explains, but the market may not be able to provide them with that.
The model of modern trade in Egypt is not based on a win-win situation. Payment conditions are tough on the manufacturer as payment terms can reach up to 90 days, which is a long period. In layman’s terms, if a manufacturer wants to list a product in a hypermarket, the former will not get paid for the products that were sold before three months have passed.
Additionally, the placement of the product within the hypermarket depends on how much the manufacturer is willing to pay – higher shelves require more money, according to Sheikha. Most of the products Brimore is offering do not have a designated space in hypermarkets because manufacturers often do not know how to price, position and promote their products, he says.
“Manufacturers do not earn money from hypermarkets; they just secure volume to pay their workers,” Sheikha emphasizes.
Hence, Brimore is there to offer manufacturers what hypermarkets do not provide: lean payment terms and appropriate product placement.
Growth and revenues
When the company first started, it had 200 stock keeping units (SKUs); today, it has 850 SKUs and a little over 30 listed manufacturers. Brimore usually targets medium-sized manufacturers who have the capacity to produce, but suffer from underutilization.
Brimore gets massive discounts – sometimes up to 45% – from the factories for which they distribute and sell products. The company also gains a margin from each transaction.
However, Brimore didn’t position itself as a distribution platform from the beginning. In the beginning, the founders thought of manufacturing high-quality products that could compete with imported products. However, and after investors withdrew their money, the business model turned asset-light by distributing already existing products.
The new model helps Brimore list upto 50 new products each month, which Sheikha says would have never been possible if they would have stuck to their old business model.
What the future looks like for Brimore?
About 5% of the Egyptian startup’s portfolio consists of imported products. The long-term plan of Brimore is to become Egypt’s key distribution channel. The company positions itself as a gateway into the Egyptian market for both local and international brands.
“We aim to become the main distributor for locally-made products or new products from abroad and to be the go-to place for any manufacturer that has a new product,” Sheikha concludes.