Yebo Fresh CEO and founder, Jessica Boonstra unpacks how she and her team built a business that penetrated an historically inaccessible market.
When Jessica Boonstra and her family moved from the Netherlands to South Africa almost six years ago, it was because they were tired after spending the whole year working towards their holiday on the African continent. Why not rather move to Cape Town and live the life they dreamed of?
And so, Jessica, her husband, three kids and a dog made the move. Jessica’s background was working for a leading European retailer on online business development, and at first, she was excited to see how her experience could benefit the local ecommerce market. She soon realised that she couldn’t do much without a strong local network, though, and spent the first three years consulting and scrambling for work.
During that time, something magical happened. Jessica looked at the local urban and suburban ecommerce market, which was growing in a steady and predictable way, and then the much larger township market and realised that here was a big problem that required an elegant solution – a solution that did not yet exist. Enter Yebo Fresh, a fresh foods and groceries e-tailer that caters for the township market in the Western Cape. The big idea
“In all business, we tend to bring our experiences and ideas to a market, thinking that what worked in one market will be easy to replicate in another,” says Jessica. “The reality is that many big brands struggle to move into new markets because of this exact approach. I was guilty of it too, at first. I kept looking at the South African market and thinking, ‘how can my experience benefit this market?’ It was only when I stepped back and really started listening and learning that ideas and solutions began to click into place.”
It was the township market that really captured Jessica’s attention. Here was a R160 billion segment of South Africa’s FMCG market that suppliers found difficult to penetrate. “It’s an incredibly long supply chain, from suppliers, to wholesalers, to midi wholesalers and finally to spaza shops. Suppliers have very limited access to their end consumers. If they’re launching a new product, they have limited means to talk to their customers, and they can’t receive direct market feedback either.”
For the consumers themselves, the challenges are even greater. “When I arrived in South Africa, I began volunteering in our local communities, and I became friends with families living in townships through school and my children. The difficulties that they face just to do their grocery shopping are incredible.
“For the majority of brands, there’s no formal supply chain into the spaza shops. The product also has to move through so many layers, which means that brands have limited influence on the way the product is priced and marketed, but the spaza shop owners themselves make slim margins.
“For the big shopping trip, once a month, consumers go to their ATMs, withdraw a large amount of cash, and head to the large malls, hunting for specials. They then need to carry these monthly groceries home, using taxis and ending in long walks to get home. They run the risk of getting mugged as well. At the height of the Covid lockdowns, queues stretched kilometres. People were queuing from 5am to 11am, after walking 2kms to get to the mall.
The Yebo Fresh team spent hours and hours looking at the problem from every angle. Jessica combined the current players in the market and their needs and experiences, with what she knew of retail and ecommerce. And slowly, an idea began to take shape. At the core of it was this simple question: Once a month, thousands of people would travel kilometres to buy staple foods, such as 10kgs of frozen chicken. Didn’t it make much more sense to bring the chicken (and all the other staples) to them? The challenge was figuring out how to do it. Starting from the ground up
Historically, many townships can be extremely dense, with very little real estate assigned to formal shopping malls. Even in larger, more spacious townships, many tiny shops (spaza shops) have sprung up, but there are no neighbourhood supermarkets.
“My experience is Holland, of course, but the same is true for grocery retail around the world. You start out with local artisans – the butcher, the baker, the candlestick maker – and over time these are replaced by large malls as buying power increases and the ‘day out at the mall’ becomes a luxury. In a next stage, the popularity of the mall as a destination often declines and is replaced by neighborhood supermarkets, online shopping and ‘experience shopping,’ with the return of the artisanal store. Today, in more upper-market suburban areas, there’s a supermarket in every two-kilometre radius and we’re seeing the growth of online and of the artisanal stores again, and a huge uptick in retail spending that supports artisanal brands as well.
“It’s the natural progress of retailing, but for townships, the ‘massive mall stage’ is a huge pain to the customer, mainly when it comes to grocery shopping. Window shopping or having lunch at KFC is fun but carrying 10 kg of maize meal really isn’t! There has been little investment into the natural next stage in grocery and food online solutions, artisanal and experience stores or neighbourhood stores from the formal sector.
“To see how the township market is viewed by the formal retailers, we just need to compare an average supermarket in Constantia to a same-sized store in Khayelitsha to see this at work. Retail innovations and concept developments are largely taking place in the upper markets, and yet there’s a very real need and opportunity to solve key challenges and address customer needs and wants in the townships. And it is that gap that has been rapidly filled by smart local entrepreneurs, street vendors and spaza owners over the past ten years. They are the new ‘neighbourhood store.’”
Through her volunteering work, Jessica had already formed connections with local investors who were interested in finding social solutions to home-grown problems. Leveraging her frozen chicken story, she once again asked the question why so many people had to get in a taxi to travel to Wynberg for 10kgs of frozen chicken. Why not bring the chicken to them? It was a far more efficient solution.
Her first investor’s response? “Start a company that figures out how this works and I will fund you.” So, Jessica got to work.
She started with a team of four, sitting around her kitchen table and packing products in her garage. “We immediately recognised that we couldn’t take an existing model such as CheckersSixty60 or PnP Online and tweak them for townships. Yebo Fresh needed to be an entirely new solution that addressed specific pain points.
“We approached it like an experiment. I had to unlearn everything I knew about the online world. The solution wasn’t just building an app – our target audience often have limited access to data and in many cases don’t have smart phones. We also needed to build trust. This is an audience who have trusted the same brands for generations. Trust is critical. There’s no room for fads or low service levels.”
It was this realisation that triggered the first traction Yebo Fresh experienced. “We involve the local community. We visited with elders in the village, ‘mamas’ who were well respected and had influence. We invited them to bring friends and to look over our fliers while they drank coffee and tea. We didn’t pitch anything to them – we asked them what they would buy, how they cooked, how they made decisions, how they budgeted… when, how and why. We held non-stop focus groups trying to understand our audience and their pain points.
“We then extended this into other members of the local community. Who could we onboard as delivery drivers? Who could assist us with customer service centres, handing out fliers? Everything needed to be local, because only community members could understand the areas we were entering and their intricacies.”
One of the biggest early lessons for Jessica and her team was a deep wariness for upfront payments. “The online model is pay now, receive your goods later. That wouldn’t work. We needed to enable our customers to see their packages – feel and touch them, and then only give us payment. This had to be built into the solution.” Pulling multiple stakeholders together for an elegant solution
There are always multiple sides to any business, because an exceptional brand solves problems for many different stakeholders. In Yebo Fresh’s case, the platform seeks to solve key challenges for township residents, but FMCGs have long been looking for ways to successfully penetrate township markets as well.
“This was an interesting space for us. On the one hand, there is huge trust towards many of the big FMCG brands within the townships. Having a Tiger Brands logo on one of our flyers, for example, or coming in with an Iwisa sample, gave us credibility. Similarly, the FMCGs have always struggled to get their products into the townships at scale. They rely on big box retailers on the outskirts and spaza shops. But spaza shops have their own challenges.
“First, the big brands have no control over how their products are presented, marketed or priced. The spaza owners themselves deal with broken supply chains and in many cases need to close up for several hours to purchase products from wholesalers. They have limited access to funds and investment options to expand their offering or improve their store, however, they often are surprisingly creative, entrepreneurial and interwoven within their neighbourhood community. There’s also very little feedback going from the spaza shops to the big brands – and this customer research can be extremely valuable.”
For two and a half years, Jessica and her team worked closely with community leaders, spaza store owners, and the big brands themselves to test different ideas and solutions.
“We didn’t have an instant silver bullet,” she says. “There was a lot of trial and error, but slowly we’ve built a value proposition that works for all of our stakeholders. For example, the FMCGs see us as a highly valued gateway into the townships. Through us, they now have direct access to their consumers and the spaza shops.
“The spaza shops were also a surprise for us, because they weren’t our initial target market, but we soon learnt that we would work with them far better than against them – after all, our goal is to make shopping easier in the townships. Working with spaza owners achieves that. The spazas are now our fastest growing segment. We deliver directly to them (the spaza owner wins), more product is available (the consumer wins), and the marketing and presentation of products is right (the FMCG brand wins).”
The solution is elegant and simple, but it’s taken enormous grit, determination and agility to get here. For the end consumer, it’s simple: You can Whatsapp a number and begin with a bot that walks you through the specials, until you need to chat to a sales rep (who are available in multiple languages). The entire product assortment is also available on Yebo Fresh’s website, and customers can order, pay now, or pay later, via cash or card. Cards are encouraged to avoid holding too much cash.
Overall, however, the business’s fastest growth has been in response to the Covid-19 crisis. Jessica’s team has grown from four people to over 30 in under 12 months, as the business has adapted to finding critical solutions in the middle of a pandemic. Covid-19, urgent needs and accelerated growth
“In our first year, we were focused on the consumer market only,” says Jessica. “We were experiencing nice growth given our tiny budget, but it still wasn’t what we had hoped for. Word of mouth hadn’t gone viral. Instead, we were slow and steady. Nothing to complain about, but we were looking for ways to penetrate the market further.”
And then March 2020 happened, and the country went into lockdown. “It was like the crazy switch was flipped. Queues at big box stores suddenly stretched into hours as panic buying began. Spaza shops and street vendors were shut down. Children were going hungry and the usual sponsors to these communities had no access.
“And there we were. We had the capability to access these markets – we could help the NGOs and sponsors get their food parcels in. The scale that we had been looking at long-term happened overnight.”
Jessica met with one of the top three food parcel suppliers in the Western Cape to understand their volumes and needs and got to work. “Our tiny warehouse was upscaled to two large warehouses within a matter of weeks. We went from a team of four to 30 full-timers and 30 more part-timers (pulled from local soccer teams as these were athletic young men and women who were also great team players but grounded due to lockdown) in the shortest time imaginable – and we just got to work.
“Everyone had a common goal, and it’s amazing what you can achieve when you share the same purpose. We needed to be agile, flexible and understanding. The biggest benefit that we had going for us during that time was that we had entered the business knowing that we wouldn’t survive with a fixed mindset. We couldn’t assume how it was going to work. Instead, we had to be agile and iterate, and we’d become good at those two things. Covid-19 just took what we had been doing and accelerated it.
“We continued doing what we had been doing, but extended our revenue streams to the NGOs, including soup kitchens, day cares, ECDs, children’s hospitals. More deliveries into the townships meant more branding coming in and out, until people really wanted to know who we were and what we did – and suddenly we had word of mouth recognition. It just takes time and patience.
“We have all these incredible new partners and the tremendous growth we’ve experienced helps us reach more people and touch more lives.”
Lessons in differentiating
Much of Yebo Fresh’s success comes down to two things: A strong purpose and desire to use business as a force for good, and the willingness to throw out the old and develop a solution from the ground up.
“We are a for profit business. That’s how we will remain sustainable and be able to continue to make a difference. But we are also a business that is guided by a strong sense of purpose. This allows us to step back, look at the situation as it is, and find a solution that works on the ground, instead of pushing what we think will work.”
Which leads directly to the second point: being willing to let go of what isn’t working to find purpose-fit solutions. These are Jessica’s lessons in becoming a true differentiator: 1. Shut up and listen
“The spaza segment was a critical element for us, but it took time to figure it out. At first, we didn’t have right pricing, products or approach. Everything we tried didn’t work, and we ended up with so many failed attempts and weeks of reiterating and listening and adjusting. Until eventually, one of the spaza owners told us, ‘just shut up and listen. Don’t tell us what you think works. Listen to us. This is different.’ It was a powerful lesson. Your customers will tell you what they need – as long as you’re open to hearing them.” 2. Differentiate through your business model
“We are a food solution business and an ecommerce platform. If we just looked at ourselves as an ecommerce player that takes an order, packs it and delivers it, however, we’d just be another copy of what’s out there, and that’s not exciting. And so, we look at the problem instead. That’s our model. We were faced with an NGO challenge. A partner came to us and said, ‘we have R1 million and we need to feed as many people as possible with a balance of nutrients. What should be in our soup kitchen and food parcels? We sat down with our NGO partners to figure it out. We didn’t want to only offer the cheapest food parcels. We needed to deliver as much of the right nutrients to the right people as possible. Did you know that one third of all food produced in South Africa ends up in landfills? And lot of that comes from the retail supply chain because of inefficiencies, damage and products that can’t be sold. One of our values is to become waste neutral, with the ultimate aim of becoming waste negative. So, how could we leverage that value for this problem? We reached out to our FMCG partners to access product that was still at risk of getting overdue, and donated on behalf of them to the NGO market that we were already serving anyway. Our trucks are going into the townships and returning empty – here is a great opportunity to bring plastics for recycling. Every step of the way we’re looking for inefficiencies that we can solve.” 3. Embrace your purpose – you won’t look back
“We are a for-profit business, but we are not just about making money, that isn’t our purpose. Our purpose is to serve people, to create jobs and empower entrepreneurs and to solve the different food and shopping challenges that our local communities face. To do that, we need a hard Profit and Loss statement, strict KPIs (Key Performance Indicators), and across the business we must focus on continuous improvements. Our investors care about the impact of the businesses they invest in. They share our purpose, but they also know that we can only achieve our goals if the business performs well and so they are strict with us. We’re judged on that performance. Whether or not you have investors to answer to or not, always be hard on your numbers. If you want to succeed and have sustainability, you need to know exactly what is happening in your business.”