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The township is the next business frontier, not a place for charity – Yebo Fresh

Spazas, bakers and other retail outlets running their small businesses in townships face many challenges. They often close for supplies, carry cash and have no access to credit. Intrigued by these township markets, Jessica Boonstra, originally from the Netherlands, set up her business, Fresh Yebo from his garage, delivering products to a local community. When Covid hit she became ‘really enterprising’ and with ‘a bit of a bluff’ she secured funding from the Scheinberg Fund build infrastructure to distribute food parcels. Since then, Boonstra, with the help of his team, including Sales and Marketing Director, Lerato Ramollo, has grown Yebo Fresh from a “playful start-up” to full scale with R41.5 million. annual sales during the last fiscal year. year. Boonstra told BizNews, “People still think of a township as a place for charity, but maybe not so much for business, when it’s actually the next frontier.” –Linda van Tilburg

It started in a garage in Hout Bay – Boonstra

It was about four years ago. So, to begin with, I’m Dutch by background. I have a background in engineering, logistics, retail before coming to South Africa seven years ago and was immediately fascinated by this township market, which we don’t have in the Netherlands. These two parts of the same country bring challenges, but also energy, dynamics and opportunities. I couldn’t stop talking about it and one day I had a conversation with a British entrepreneur, and he said to me, ‘Start a business and I’ll fund you’. So that was four years ago, and we literally started out in my garage with the family personally picking up, packing and delivering to the local township, Imizamo Yethu, which is around the corner here in Hout Bay. So, from humble beginnings four years ago, we are now a team of over 70 people and active in 25 townships across the country.

The stakes of points of sale in the townships – Ramollo

For a very long time, spaza stores or retail outlets in townships had to suffer from having to leave the township and travel to the city where your wholesalers or modern outlets are traditionally based. So, take a taxi from home, indeed, even before that, you have to close your outlet for half a day or even a day. You then pay for the bus fare, you carry mostly cash, and you go to these outlets, and you go from outlet to outlet looking for the best price. There was definitely a need and there was a problem that we needed to solve. We needed to make sure our customers stayed with the company and continued the business of running their outlets, but also saving them money in terms of traveling to cities or suburbs to seek out the best prices or search for these products. And we pride ourselves on providing convenience, but also empowering our customers to ensure they are more successful in their businesses and that businesses thrive and prosper. Another part of it is offering them ideas, information. Many of our clients work in silos, especially South African clients, so they don’t really have the ability to share information with each other, understand what’s hot and what’s not. not, how to better manage their business. We share this or this knowledge because we have a broader vision of the market as a whole, and with all our other partners as well. We are able to share information with them that enables them to run their businesses and become bigger businesses than they are now.

Building a business from food parcels during Covid… with a bit of a bluff: Boonstra

We were still a small, small team that only operated for about a year when Covid hit. That’s when we really became an entrepreneur because it was a matter of do or die. Many businesses struggled during this time, but we were an essential service provider and had experienced a bit of what it was like to operate in the township environment. So, we approached a series of NGOs, and we knew they needed to feed this economy that had suddenly collapsed overnight. There was a massive demand for food parcels and soup kitchens to help people eat. So we said we could do it, and we couldn’t. We were bluffing because we didn’t have the infrastructure. That’s when we met the Scheinburg Fund, which gave us the funds to build the infrastructure, rent a warehouse, build the technology and the team to be able to quickly scale in a few weeks, from 6 to 60 people. to go from a small warehouse, which was the size of my garage, to a real warehouse. That was incredible support, and it’s really what started our rapid growth as we started serving businesses in the township and a much larger part of the township community.

Going from a “playful start-up” to truly expanding with bigger dreams

We hired a series of investors, many of whom were entrepreneurs themselves. So our angel investors understood the market. They understood e-commerce, for example, and we were lucky to have this wide range of entrepreneurs who weren’t just bringing in funds. They also brought their experience; they brought a network. This was an equity financing that was secured in a few rounds over the past period. We are now in the position where we are fundraising again. Of course, we are considering much larger ticket sizes. We have gone from this kind of playful young company to a real scale-up. Now we are talking to VCs and other bigger players for proper investment. … Right now we’re fundraising for $2-3 million, and we hope to close that around November of this year. We are in the middle of these conversations and any interested investor or partner, we would love to talk to them.

What we are seeing is that, fortunately, Africa is increasingly being seen as an attractive opportunity to invest in, as there is rapid growth and a great digitization movement. We’re not just talking to local investors, but fortunately there are plenty of international investors who see this as where the next wave of growth will occur. Therefore, both South African and international investors are welcome to talk to us.

How Yebo Fresh Helped Township Entrepreneurs Thrive – Ramollo

As you can imagine we are able to save an outlet owner or spaza store owner time and having to go out and stock up and spend extra time In the enterprises ; we’ve seen businesses grow from that. The ability to know there will be a sales rep coming through or I can order through the app. It also means more money in their pocket. Security also for business owners, they don’t have to travel with cash. We’ve also made the process easier by introducing payment options, things like Shop2Shop or A2Pay. So, unlike handling cash, they can pay virtually, but also be open to payment insurance or credit insurance, which they usually wouldn’t have because they are informal businesses. Now we offer payment terms where they can pay us after seven days of inventory. So really a big impact. As I said, we have seen businesses grow. We’ve seen our order sizes increase and our minimum order is now R1,000, and we’ve seen the number of our customers who started with us get much larger than where they started.

Buy now, pay later with JP Morgan Bank – Boonstra

If you are township entrepreneurs, no matter how successful, let’s take a few of our clients. For example, a lady who employs 12 people. Officially, his company doesn’t exist, does it? She and her 12 employees would appear in the records as unemployed and they are not formal businesses and they are not recognized as such, which also means that she cannot access any type of loan even if she does tremendously and built this amazing business. So with JP Morgan looking to address these types of issues, we have this partnership with another company called BFA Global, where we’ve introduced a buy it now and pay later solution, which is underwritten by JP Morgan Bank. This allows us to deliver goods to a customer and have them pay up to seven days later, which not only takes some of the risk of getting the money out of the system, but also allows them to get their money back before pay. us, allowing them to invest in growing their business, as well as building a formal credit profile. Because now we see that the default rate of these customers is less than 1%. That’s incredibly low, and these customers are actually incredibly reliable in repaying their loans. So building that profile now allows them to become more formal players, other players, and say, “Hey, I’ve got this credit profile.” I’m really good at it. Can you give me a suitable loan to start growing my business or grow my business even better than I am today? »

Townships are places of opportunity, not charity

This challenge, but also the opportunity to support local entrepreneurs, is often underestimated. People still see this township as a place for charity, but maybe not so much for business, when it is actually the next frontier. If you look at absolute numbers, if you look at entrepreneurs who are established, not just street vendors, but entrepreneurs who have a business like spazas, a caterer, a baker, a township restaurant, we’re talking about a half a million of these entrepreneurs who bring in an annual value of R260 billion. It’s a massive economy and it’s growing faster than formal retail – it also creates a massive amount of jobs and brings a lot of money into the South African economy in terms of renting, for example . The importance of these entrepreneurs and how important it is that we help them grow and prosper cannot be underestimated.

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