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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
OPERATING
PERFORMANCE
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
17
MATERIAL IMPACTS
AND RISKS
CONTINUED
Risk
Context
Mitigating factors
Elimination of
the middle
man
In most industries a
wholesaler is at risk of
being eliminated from the
supply chain if the
supplier has the
infrastructure and
capabilities to supply the
customer directly.
From inception, the objective of the Blue Label Group was
to become a one-stop destination for the supply and
distribution of all of the networks’ offerings. This would
provide both convenience and efficiency to the retailer and
customer. Furthermore the technology and footprint
developed by the Group allows retailers to earn additional
revenue by the introduction of additional products. This
would make it difficult to disintermediate the Group.
No single network can offer this complete solution.
The introduction of the sale of prepaid electricity, and its
phenomenal uptake in South Africa, strengthens Blue Label’s
foothold as a one-stop destination that is most convenient to
the retailer. Blue Label’s increasing bouquet of products and its
aggregation thereof will continue to ensure that its middle
man status as distributor is essential to the retailer and will
remain entrenched. The Group will continually develop and
upgrade new, innovative products to strengthen the
foundation of its middle man status. Many merchants have
access to limited cash flow, and by utilising Blue Label’s
vending solution, this allows them to vend products and
services which they previously could not afford to, due to
various complexities, i.e. managing stock levels, obsolescence,
pilferage at store level, inability to order small quantities, and
access to limited stock ranges, to name a few.
Also, the addition of such products and services, and a growing
suite of products, necessitates that Blue Label not only excels in
the sourcing, management and delivery of these products and
the management of its merchant base, but simultaneously
delivering an excellent supporting back-office capability –
including the ability to deliver and manage reconciliation and
settlement on behalf of its customers, extensive and professional
merchant support services, and deep technology support for
online and integrated systems. These competencies make it
even more difficult for Blue Label to be disintermediated,
because of the significant value that it provides to merchants,
not only in the products and services it delivers, but also in
respect of the increasingly complex back-office support
functionality required to deliver such services.
Blue Label is an aggregator and an enabler to both its
customers and suppliers.