Alle Bejimla: A Game Changer?

On the Morning of Wednesday February 11, 2014 the blue and yellow striped warehouse of Alle Bejimla’s third branch, which is located at Merkato in front of Khelifa Building in Addis Ketema District, was busy with the retailers who were there to buy commodities coming from five districts including Lideta, Kolfe Keranio, Addis Ketema, and Gullele.

Abdurezaq Anwar, a retailer who has a shop in Arada District around Taliyan Sefer, was part of the crowd to make his weekly purchase of consumer goods, his list including soft drinks, butter, biscuits, and detergents. He came twice a week, spending 4,000 Br a week on average, since he became Alle’s client three months ago.

While it has helped him make most his purchases at just one place, instead of having to go from one store to another as he used to do before in Merkato, he, is nonetheless, frustrated that the choice of commodities at Alle is always limited.

While leaving the store of Alle, Abdurezaq was not satisfied as he could not get the brands of butter and soft drinks he wanted to purchase.

It was back in 2013, that the Ethiopian Trading Enterprise (ETE) was established in a bid to create modern and reliable trade practices and become operational in May 2014 with the trading name of Alle Bejimla; its first store at Megnenagna, in Bole District, close to the automotive company AMCE, was inaugurated by Prime Minister Hailemariam Dessalegne. In the following two months, it opened two more stores. The second is located at Kaliti, in Akaki-Kaliti District, and a third one is the one Abdurezaq was visiting. All of the three stores used to be a part of the main Merchandise Wholesale & Import Trade Enterprise (MWITE).

Alle has four target customers: retailers, consumers’ associations, hotels and labour unions in government and private institutions. And it offers buyers a variety of commodities, groceries, snacks, beverages, personal cares, cleaning products and sanitary products. Currently, it has 3,000 customers who are purchasing the aforementioned commodities regularly. Of the total number, 2,248 are retailers, 145 consumers association, 114 government and private institutions labour unions and the remaining are hotels, restaurants and cafeterias.

Abdurezaq is one of the retailers who registered as a customer of Alle after fulfilling the criteria, which states that the companies must be engaged in the business of selling or providing goods solely and directly to final consumers with no room for transferring the products to other businesses. As long as these businesses have the capital, they can buy as many items as they want. In addition, Abdurezaq gets an ID card as a member of Alle after submitting a copy of his tax identification number (TIN) and identification card from his Kebele.

“Alle has a narrow product variety than other private wholesalers, especially on soft drinks, powder milk and packed butter,” Abdurezaq said as he was leaving Alle.

This concern is also shared by Tsegaye Bore, general manager of Genet Supermarket, located at Lideta District, close to the Federal High Court who was at Alle Merkato store on the same day to purchase sanitary products.

“I cannot get the brands that my customers demand, so I go to Merkato to get the commodities,” said Tsegaye.

Nuredin Mohammed, general manager of Alle, admits the problem.

“Distributors are not our suppliers. We directly purchase the products from the manufacturers locally and internationally, so we face a problem of getting some commodities, which have exclusive importers here in Ethiopia,” he says.

Ten months back, when Alle commenced services, the product assortment was 150, which has now grown to 400, according to its six months performance report. While 55pc is imported, amounting 75.4 million Br, the remaining products are sourced directly from the local manufacturers.

“We are trying to deal with some global companies to supply us the products they are providing for their exclusive agents here,” Nuredin told Fortune.

Alle, which when roughly translated, means “wholesale is available,” was established for price stabilization, ensuring sustainable supply of products as well as introducing modern wholesale trade practice of cash and carry system. Alle Bejimla, also called Alle, began operations through a business-to-business model that focuses on providing goods to businesses like kiosks, cafes and hotels. The one billion birr project was initiated by the government over concerns of the lack of competition in the wholesale market of the country that caused runaway inflation.

In an attempt to tame the escalating prices on consumer goods, the government tried to control private wholesalers’ import distributions and warned them it could open the sector to the test of foreign competition. For a government that had repeatedly expressed its disappointment over the domination of the wholesale market in Ethiopia by few powerful suppliers, Alle’s introduction was expected to spur more competition into the market and ultimately bring down prices.

The involvement of an international consulting firm, A.T. Kearney, based in the United States with almost 90 years of experience under its belt and a one billion dollar earning in 2013, in the establishment and launch of Alle – from strategic design up to implementation – was one of the unique features of this project. Prior to giving the task to A.T. Kearney, the government had been dealing with the officials of Wal-Mart Stores Inc., the world’s largest retail firm for the management of the ETE. But this deal failed to materialize due to disagreement on some terms.

The A.T. Kearney team had assessed multiple developing market examples and designed a localized cash and carry model that responds to the needs of Alle’s target customers. A.T. Kearney assessed 40 supermarkets, 100 minimarkets and 18,000 kiosks (most family-owned) in Addis Abeba and characterized Ethiopian consumers as highly price sensitive.

After the assessment of A.T. Kearney, Alle was initiated for establishment with a paid-up capital of 250 million Br, aiming to distribute food and other consumable items with competitive prices to retailers and entities serving consumers such as hotels and cafeterias and restaurants.

Eventually, it was decided that a new state-owned enterprise would be formed to increase competition in the sector.

The new cash-and-carry chain has a board with six members from the Prime Minister’s Office, Ministry of Trade (MoT), the Ethiopian Revenues & Customs Authority (ERCA) and the Trade & Consumer Protection Authority at the MoT. The board is chaired by Neway Gebrab, economic advisor to Prime Minister Hailmariam Desalegn in the rank of minister. Nuredin, advisor to the state minister of trade, and previously the Director of the Trade Registration & Licensing Directorate at the MoT, who was also involved in the establishment, is the manager.

Alle has Enterprise Resource Planning (ERP), a business management software that the company can use to manage business processes, including inventory and cash flow. It operates with division of tasks that facilitates the trading at the warehouse, who loads the commodities the retailer purchases and marketing intelligence team, who goes out and motivates retailers to be members of Alle and at the same time checks that member retailers are selling the commodities at the Maximum Retail Price (MRP) to the end consumers.

The market intelligence team controls whether the retailers are selling the commodities at the MRP set by the company, which allows them 10pc to 20pc profit margin, according to Kirubel Wube, store manager of Alle Merkato. If the retailers are not selling the commodities at the MRP, members of marketing intelligence teams can warn the retailer and have the authority of taking away the membership ID of the retailer, as stated by Kirubel. The intelligence team will also collect feedback from the retailer and convince lost customers, who have not visited Alle for more than two months.

Yenegew Sew Consumers Association in Kirkos District Wereda 3 Kebele 4, is one of the lost customers of Alle. It used to buy rice, biscuits, candles, matches, soap, and detergent from Alle. But it did that just three times. The association had not made a purchase from Alle for more than three times, following the price difference Alle has from other wholesalers and narrow profit margin, which was restricted by the price cap by Alle, according to Reta Fekenssa, general manger of the Association.

Yenegew Sew was established in 2007 and currently has 1,840 members and offers commodities for the public with lesser price for their members and the community under Wereda 3 through their two retail shops. The general manager of Yenegew Sew attributes their departure from Alle to the weakness of the intelligence teams in regards to communicating with them as they have various comments and complaints form the service they were getting from Alle.

“They sell a kilo of macaroni for 18 Br, when they are sold at 17 Br from other wholesalers,” said Reta. “On top of that, the profit margin they gave us is too narrow and did not even cover the cost we paid for the commodities and a cost for loading and unloading of the commodities.”

Yengew Sew pays 700 Br cost for the transport of the commodity from the Alle Megenagna store to their retail shop located in Kirkos District in front of St. Yared Church and pay eight Birr per quintal to unload the commodities, according to Reta. This led us to shift to other wholesalers such as East Africa, Alsam and Hasset wholesalers as they transport the commodities to our door freely and unload the commodities without any payment, added Reta.

The other major claim and reason by Yenegew Sew to drop its membership from Alle is the 50 packets of biscuits, each containing 48 pieces they bought from Alle. They purchased the commodities based on the price and the commodity list they received from the market intelligence team, which they get at the store but the list did not at all match in size, claims an old salesperson of the association who declined to be named.

“We told them to change the product with the one we ordered first, which had 250gm. Rather, they gave us 225gm, but we did not get any response. In addition, we cannot get buyers as the prices are expensive and inconsistent with the size,” he complains.

“What happened with Yenegew Sew might be inconvenient, which can happen in the work process and we will look into the incident,” Abraham Hailemariam head of Store Operations told Fortune.

“The plan for the last fiscal year was to have 2,000 members but it has grown to over 3,000 with the aggressive move of our sales team,” said Nuredin for the members of media who attended the official inauguration ceremony of alle.et, the website of the company with the aim of increasing interface with their clients at Harmony Hotel off of Cameroon Street on the road that leads to Africa Avenue on the morning of Thursday February 12, 2015.

Despite the fact that Tofic Abedella, a shop owner at Arada District Wereda 3 behind Ampere Cinema wishes to buy commodities from Alle as he does not like the hustle at Merkato to purchase commodities from different shops and the hustle he faces in the crowd, he believes he cannot directly purchase commodities from Alle as they sell only for selected retailers from the area.

A profit making state venture, Alle is moving with a plan to open 36 stores in 26 major towns across the country in the coming three years in addition to the three stores it has opened with 26 million Br, and it is on the move to open four more stores in the coming months in Hawassa, Shashemane, Bahir Dar and Dessie. It plans to have 20 stores by the end of 2016 with the plan of increasing its product variety to 600, which might satisfy Tsegaye and Abdurezaqe, who need to get a variety brandsof one commodity at Alle.


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