B2B Startup Taywan Eyes to Disrupt Merkato from Jijiga: Here is How

Amein Eskinder remembers the time when his grandmother used to be sick. She needed medication weekly, and he went out every Friday to find them. Sometimes his search for medication required him to visit every pharmacy in Jijiga, even traveling as far as the border town of Wechale.

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On his way, he thinks about platforms such as Amazon, the American multinational technology company focusing on e-commerce.

He also saw how high and synchronized the prices of products in Addis Ababa were. While abroad, there is a variety of pricing in the same marketplace.

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“The Ethiopian market is basically centralized and run almost like a monopoly market,” says Amein.

While attending his studies at Jijiga University, Somali Regional State, he dwelled on how such problems could be solved through a B2B (Business-to-Business) platform. Business to business is a type of commerce transaction that exists between businesses, such as those involving a manufacturer and wholesaler or retailer.

His concept design for the platform won him an award in 2018 at “Solve It,” a nationwide innovation competition for Ethiopian youth by iCog Labs, an Ethiopian Artificial Intelligence (AI) company. He was one of the 34 finalists in the nationwide competition.

After graduation, Amein came to the capital, where he was employed as a full-stack software developer. But Amein was also working on his startup at the same time. Formalizing his idea, he returned to the Somali region to test his hypothesis.

Amein selected the Somali region because he believed an e-commerce platform in the region would be quickly adopted.

“Most of the country’s mobile money traffic comes from the Somali region. HelloCash was first introduced there six years ago, while Telebirr is just over a year old. The society has high-tech adoption,” Amein told Shega.

At first, the name of the platform was Jijiga Online. But it was later changed to Taywan as Amein had nationwide visions for his startup. Taywan was perfect as the name is used to describe marketplaces across different cities in Ethiopia.

In addition, Taywan also started as a B2C (Business-to-Consumer) business but pivoted to B2B around one year ago due to the low purchasing power of individuals in Ethiopia. The low frequency of purchases couldn’t bring the desired profit margin for Taywan.

What is Taywan?

Taywan Store Inc. is a B2B e-commerce supply chain and embedded finance that offers a range of consumer goods and financing for small retailers.

Currently operational in Jijiga, Harari, and Dire Dawa, Taywan is a hybrid e-commerce platform that powers trade and restocking for merchants, retailers, and kiosks. Taywan Store offers a 360° solution that enables factory-to-retail distribution, including financing for MSMEs.

According to Amein, Taywan has four major goals: to create a free market that boosts MSME’s growth and sustains a competitive environment for manufacturers and suppliers; to eliminate artificial inflation and create a strong linkage between stakeholders; to enable data-driven-decision-making to achieve import substitution; and to deliver homemade products to the global market.

The Bigger Fish: Merkato

The supply chain in the Ethiopian market is broken as it involves many stakeholders. The price of a product increases as it passes through each stakeholder in the supply chain. The chain is also outdated because it is not data-oriented.

Merkato is also very centralized, making it a powerful marketplace in the country. Importers in Merkato face several challenges. The wholesalers do not pay the importers immediately; rather, they pay them later. For the importers who utilize Letters of Credit, the dollar value may change within that period, resulting in a loss.

Amein adds that the market can sometimes also be hostile, bankrupting the importer by attacking him through different vices.

Highly interconnected wholesalers determine the price of products at a desired time and place, causing a ripple effect of a price surge throughout the country within short intervals. This uniformity of pricing in the market creates artificial inflation.

Amein explains the typical supply chain from Merkato to Jijiga.

“When products are imported from abroad, they go to Merkato, then to wholesalers. Bukars [Somali traders], after buying it from wholesalers in Merkato, they distribute it to smaller Bukars in Jijiga, who sell it to retailers,” Amein explains.

“The connection these people have is limited by finance and data. There is no product demand and supply data, and Taywan is here to bridge that gap,” added Amein.

How does Taywan work?

Taywan is an offline service that mimics an online one.  Merchants first get profiled and submit their photos, identification cards, and business licenses. The location of their shop is also registered through geolocation, and the merchant is then given a customer identification card (CID).

Merchants are connected to Taywan via a call center. When they call the center, the merchant orders the product using his CID. From the first day on, Taywan records all the transactions and determines the creditworthiness of the merchant.

A merchant can order a product for restocking by calling the dispatch center. Taywan delivers the products within 2 hours of the call, free of charge. Currently, Taywan uses rental logistics to deliver the products.

Taywan buys fast-moving consumer goods, products that are sold quickly and at a relatively low cost, in large quantities from the importers at a discount and then distributes them to small retailers. According to Amein, four participants in the supply chain are eliminated in this process, lowering the price of the products. Taywan also fills the data gap because it is data-oriented.

Taywan’s portal provides real-time integration between back office inventory systems and the stock held by third-party logistics providers and distributor warehouses.

The prices for the products will be set according to the prices of the products Taywan received from the importers. Making the price difference between similar products creates price competition.

Taywan has agents in different Ethiopian cities where they operate who are trained and given duties on behalf of Taywan in their respective cities. The agents are assigned a certain number of merchants, and the merchants’ orders go to the agents. These agents distribute the items as well as follow up on the merchants’ credit.

There are currently 2500 merchants on the platform and a pending list of 900. Amein says this was done through just word-to-mouth marketing alone. They have not yet enlisted importers as they buy after determining the demand needs of merchants and due to capital constraints. But they have five expressions of interest from importers and four