DC Velocity - October 2013

reduce the amount of cargo they must import through Dubai.

“That got our attention because in that way we can support our local industry and sort of motivate them to bring in their products,” Karim Safi, another member of the family, told CNBC. Left unsaid is the advantage of shorter supply lines and avoidance of international border crossings.

MANAGING RISK

All this goes a long way toward explaining why, unlike most retail startups, the Safis chose to begin by opening a distribution center, not a store. The distribution facility, which is located in Kabul, will hold buffer stock. For most of us, “just-in-case” inventory is evil, but most of us aren’t trying to establish a pipeline with the logistics uncertainty associated with a war zone.

The Safis’ grand plan calls for the buildout of their own
local sourcing and distribution network, connected to the
Ace global network. The Kabul facility, which began receiv-
ing shipments this summer, will serve as the anchor for
that distribution network. As for how much inventory the
building will house, Cronenwett expects the franchisees to
take a conservative approach to stocking at the outset. “My
hunch would be they will
start with about 8,000 to
10,000 SKUs.”
The next step will be the
opening of the store in
Mazar-e Sharif in 2014.

The franchisee says it chose the location for reasons of both security and geography. “The right place for us was Mazar-e Sharif because it’s a secure city and there are a lot of other regional places we can target from there,” Najib Safi said in the NBC interview.

As for what’s next, the Safis plan to open a second store in Kabul and perhaps Herat after that. And that may be just the start: While the franchise agreement only covers Afghanistan, future northward expansion into the central Asian nations of Uzbekistan, Turkmenistan, and Tajikistan is possible. ;

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