Kaskazi Network taking over retail distribution
Kaskazi Network is one of our key customers. We had a chat with Ng’ang’a Wanjohi, the MD at Kaskazi Network to get a glimpse of the role they play in making sure your local duka or supermarket is well stocked.
I’m really glad that you’ve agreed to tell us your story. Please introduce your company.
We give retail solutions to companies that need a route to market for their customers at the bottom of the pyramid. We handle the last mile distribution.
How do you go about achieving this?
We collect the goods from our suppliers, aggregate them and deliver them to the various retailers. There’re two kinds of retailers for these products; the key accounts and the general traders.
Key accounts are the larger retailers who have multiple branches such as Naivas, Nakumatt e.t.c. For such large retailers, we typically have a pre-negotiated contract which will include pricing, margin and product marketing. Once this contract has been signed, supply of product begins.
General trade is where you go and meet retailers that you’ll be delivering products to such as local dukas and kiosks. For many of these customers, it’s based on gut feeling as you’re not sure of their credit worthiness. They’re based in different regions so you have to assign sales representatives to cover specific regions. It’s actually quite complicated because of the number of retailers. Retailers across Nairobi are 40,000 odd so it’s a big headache getting to them as a distributor.
Our job is to increase sales for the various manufacturers by leveraging our already existing distribution network to up-sell new product lines into this channel. So for instance, if a sweet manufacturer introduces a new brand, we can get it to all of Nairobi’s retailers in a matter of days. We also help with increasing demand by assisting with marketing activities in conjunction with both the retailer and the product manufacturer, which helps with the demand side.
Another role we play is matching demand for product with the supply from the manufacturer. Our knowledge of the market allows us to predict how much demand there will be for various products and have manufacturers supply exactly what’s needed to serve as much of the market as possible, without us being stuck with stock, so basically perfectly matching manufacturer’s supply with market demand, because of our close relationship with both our retailers and product manufacturers.
This is done through our Motorbike Sales Reps (MSRs). We first do a review of a certain area, get to know how many outlets are there from our MSRs who cover a specific region and learn the market in that area. The MSR is tasked with the responsibility of selling to the market and making demand relatively predictable. They maintain relationships with retailers in their region. At the beginning of the week, sales are made on a particular route, if the retailers’ products start running out before the next delivery, they call the MSR to deliver more and this is how we create dependency. Many retailers would not like to leave their retail outlets in order to buy stock, so they prefer to have it delivered.The MSRs also collect useful data concerning the market while at it.
By close of business we know our position; (How many products did we sell? How far are we away from our target? Which markets are changing? Which ones are not and which ones are super slow?) we then take what we learn here and strategize on distribution.
Do you have specific products that you deal in?
We sell anything as long as it’s a mass market product.
If you have an MSR for, say Kawangware, does he deal with all products around that area or it’s dependent on the product?
They deal with certain products exclusively for one company. If he’s dealing with one company’s products he only deals with that product-line and only in Kawangware. This allows for specialization – increased product knowledge and customer demand patterns for a particular product line.
Wow. Seems like you’ve got a wide coverage.How far have you gone beyond Nairobi?
We are countrywide in Kenya. We’ve also done Uganda, Tanzania and Rwanda.
Please tell us how your journey has been. As the founder, what triggered you to start Kaskazi Network?
I’ve always had a passion for business since I was young, and I was fortunate enough to get mentors who gave me direction. Those are two important things. It’s good to have passion and have a mentor to guide you. One told me this is a market to go into and the other showed me how to make it in this market. I got into this market knowing I wanted something to do with sales, marketing e.t.c but I was directed to a certain line – Mass Market Distribution.
I can say mentors are very important and it’s good to learn from other people’s mistakes.
How did you discover what challenges the retail industry is facing and how did you decide on your business model?
Someone told me there was a problem with retail but he couldn’t put a tag on what the issue was. That was when Uchumi was the biggest supermarket and Nakumatt was just beginning. People were accustomed to key accounts (supermarkets) but didn’t concentrate on general traders. They were fewer and had no exposure.
So when Uchumi shook up the market when it was declared insolvent, that’s when people started looking for alternatives. By then I’d already studied the industry. I took almost one year doing market research on the kiosk industry – what do they buy? how do they buy? how do you get in? I did my first census in Kibera, my partner and I went around doing research and we mapped out our first project in Kawangware.
We started out with bicycles with metal boxes, then bicycles with fiberglass, then motorbikes with fiberglass then we had vehicles that would go round with papers for MSRs to fill in data until we started automation. You just need to keep innovating to stay ahead of the competition and keep the customers happy.
That’s true. How was the automation process for you like?
It got to a point when our photocopier machine became too small, that’s when you know you’re using too much paper. We used to photocopy forms and send them out across the country. The MSRs were supposed to fill daily reports on these forms. For places as close as Nyeri, you wouldn’t be able to get feedback on time. It would take a whole week to get feedback from the people on the ground. When you get to that point where you don’t know what’s going on and you need at least 2 weeks to actually consolidate information for the previous week, you have to start searching for alternatives. Everything was just remarkably slow.
I met a guy who said he’ll solve our problem using a software. I told him I want a very economical way of automating operations. He built an internet-based application where you just need an internet enabled phone to sign in. He made the application but nobody wanted to host it. Those days there were no cloud providers and the business was very data intensive. So we ended up buying a physical server to host our application.
What are your business goals?
Internally, it’s always about empowering our employees. From the time they come in to the time they leave, I would like them to experience their time here as transformative in all aspects. The person should be better economically, skill-wise etc. I want to create an impact in their lives.
Externally, our goal as a company is to be the biggest retail distributor in the region. To be the go-to guys for anything retail in Africa. That is the future of Kaskazi Network; to go beyond borders.
When did you start using Node Africa?
From last year, 2016. We are currently using Node Africa to back up our data. One day a guy just came in and stole my laptop right in this office. It was really bad. He just came in and put my laptop in his bag and walked out. That’s when we realized we had lost a lot of data and the backups had not really been done on the server as expected.
Being a company that has a lot of important data, what have your challenges been before starting to use this service?
We work with many companies that require you to have a Business Continuity Plan (BCP). Some of these companies when you become their key supplier they begin to open up your business and they ask about our Business Continuity Plan. They even came to the office one day and asked if everything had burnt down one day God forbid, could we continue our operations from yesterday with all the requisite data?
Eventually, I decided I needed a safe and reliable data backup service. Losing 15 years worth of data is an instant wake up call.
That’s when I consulted Node Africa for this service through referral by a good friend. I just needed our data to move to the cloud.
So basically, your laptop getting lost and losing 15 years worth of data was your tipping point.
Considering you’re across the country, please tell us how collaboration in your team works.
Everything is done centrally, in our main office. The people on the ground feed the data into the application and the staff here are able to get the information, generate reports and share with the relevant people.
That’s great to hear.How has using our backup solution now helped your business?
Peace of mind. Knowing that I can also access my data from anywhere remotely does it for me. I like it, there’s nothing as good as peace of mind. So I can say I’m happy and content with the service. Every time I meet someone who wants to move to the cloud I always tell them about this service.
You said your business goal is to make an impact, in what way have you been able to achieve this?
I’ll tell you a story, I got this from my client, a major beverage company. We ran a project for them for a number of years. During that period, they grew their business and made the highest profit they’ve ever made since inception of their business. They were very impressed. Their Sales Director called me and said he is very happy and said that the performance was exceptional; they’ve never performed as well as they did during the period in which they’d engaged us. We have since launched several products for them. We also diversified their sales channels from primarily large retailers to smaller general retailers.
We also ran a project for one of the biggest stationery companies in Kenya. The Managing Director called me, excited and said, “I have never seen people who can deliver a project like you have delivered.” He was so happy. He said we actually exceeded their expectations.
That’s very impressive. Thank you so much for telling us your story, we appreciate it. I wish you all the best in taking over retail distribution in Africa.