By Andrew Dawson
Traditional retail trade across Africa is heavily driven by a cash economy and van sales, which involves a significant amount of risk. Cash flow issues can also limit business opportunities, as retailers in this market may not be able to purchase the stock they need when they need it due to a lack of available cash.
Having access to quick capital to replenish stock through a mobile app that enables seamless stock ordering and different forms of payment has numerous benefits. It reduces risk, opens up opportunities, improves liquidity, and streamlines the ordering process, helping to move from van sales to pre-sales, connecting the last mile for actionable insight across the value chain.
Money under the mattress
Cash-driven sales are the staple of the traditional trade, which can limit the purchasing power of retailers. They are limited by the money they have at that current moment, which may mean they are unable to purchase all of the stock they need or would like. Lack of liquidity prevents optimal stock from being held, which in turn limits sales.
These retailers typically purchase off the van, which means they can only buy what the driver has in stock when the van visits, or they participate in a stokvel and have to divide the bulk-purchased goods between retailers.
When it comes to perishable goods, it can also prevent fresh stock from being readily available. This has a knock-on effect on the end consumer. There is also always a risk with cash, as it can be stolen from the retailer or the van drivers after sales, which adds to the challenge.
Intelligent technology delivered through a mobile app can mitigate risks and empower traditional trade retailers with a host of opportunities. Not only can ordering be done online, but payment gateways and even rolling credit and short-term lending options can also be integrated directly into the solution.
This, in turn, reduces cash flow challenges by providing liquidity and enables traditional trade retailers to access the pre-sales environment.
Through the consumerisation of IT, the ordering process can become a familiar, e-commerce-driven environment, simplifying the process for retailers. With the addition of various payment options, retailers can purchase more bulk for better discounts or more frequent orders to ensure stock levels are maintained without the need for large upfront investments. Mobile wallet offerings can even be linked directly with financial institutions or other innovative payment systems.
A mutually beneficial arrangement
For traditional trade retailers, intelligent mobile apps give them greater flexibility and access to different types of financing and payment systems. This means less risk, greater liquidity, and better customer service. For distributors, it enables them to move away from van sales toward pre-sales, which is an essential step in a just-in-time distribution model. The risk of drivers dealing with cash and ad hoc invoicing is also mitigated.
By closing the loop on the last mile of distribution, greater insight into purchasing patterns and other trends can be gained. This, in turn, aids more intelligent manufacturing, distribution, and decision-making. Ultimately, this results in better service for the end consumer, which, in turn, drives increased sales and profitability across the chain.
Andrew Dawson is the MD of MACmobile.
*The views expressed here are not necessarily those of IOL or of title sites.
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