E-commerce & Delivery 2021: Convenience, and Conspicuous Speed

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The E-commerce space has observed steady growth across Emerging Venture Markets to offer intricate and market-tailored solutions, opening exciting venture opportunities for investors, startups, and end-users. The industry, however, has played a larger role in the growth of the startup space than just being a Tech disruptor of traditional retail. It is no mystery that E-commerce startups are the first arrivers to any nascent startup scene and surely are amongst the first to attract VC backing. On one end, it is the scalability of the market offering, where technology is able to match burgeoning demand, and on the other, it is the growth potential of integrated technologies that attract VCs and startups to this digital space. The exceptional growth of the E-commerce industry over the years did not only reflect in the industry’s capital backing almost doubling in size YoY, but it has also reflected on the success of subsequent industries of digitization like Transport and Logistics (T&L) and FinTech across MENA, Turkey, and Pakistan. 

Funding in the E-commerce space across MENAPT has made big strides in the past few years, growing by 230% since 2017. This year alone, the E-commerce industry raised more than 12% of all capital deployed across MENAPT, ranking as the third most-funded industry after T&L which raised the lion’s share of investments this year (30%) and FinTech. A look at the top-funded T&L venture for this year, Turkey-based Getir, which raised not one but 3 Megadeals, we can trace some interesting trends to where the digital space is headed. Getir, the Turkey-based last-mile delivery startup, has built a hyperlocalized product offering that opened the scene for the on-demand and Q-commerce (Quick Commerce) proposition. The startup deploys fleets to fulfill thousands of daily orders in minutes, using technology like route optimization and fleet management as well as a proprietary GIS (Geographic Information System) to map optimal pickup locations. 

How does the success of Getir in achieving Unicorn status and raising $1Bn from global investors like Sequoia Capital and Tiger Global reflect on industry trends in the E-commerce and Delivery spaces? Here are some interesting reflections on this years VC activity: 


 


Convenience 

On top of investor target lists this year, were E-commerce and Delivery startups that have built market-tailored offerings, integrating financing and logistics solutions to create holistic and sticky services. A great example of this focus could be observed in the growth of B2B E-commerce solutions across MENAPT, and the intricacy of their offerings. B2B E-commerce startups have been gaining more and more traction from raising 7% of total deals in the industry in 2017 to more than 17% in 2021 YTD. It is apparent that a great driver to this success was in the intricacy of the product offering; startups like KSA-based Sary were able to integrate FinTech into their offerings to allow buyers room for financing. Seeing the importance of such integrations, the Morocco-based B2B marketplace Chari.ma acquired Karny.ma to provide crediting and bookkeeping solutions for its users, and this FinTech/E-commerce hybrid offering has taken off in other geographies as well. In Pakistan B2b marketplaces like Bazaar, Tazah, and Dastgyr have all integrated FinTech solutions from crediting and micro-crediting, to loan management platforms and digital ledgers. 
 

Conspicuous Speed

Going back to Turkey’s Unicorn Getir, sizable funds have been raised by on-demand delivery startups and Q-commerce propositions across MENAPT, even in SEED and Pre-SEED stages. Q-commere startups design a mix of well-placed dark stores or fulfillment centers and integrate fleet management technologies to dispatch products in short delivery windows ranging from 30 minutes in the case of Pakistan-based Airlift to 10 minutes in many other cases like Pakistan-based Krave Mart or Egypt-based Rabbit. The Egypt-based Q-commerce startup Rabbit has raised an unprecedented $11M in its Pre-SEED round, while Airlift raised $85M ($10 M more than what the entire VC space in Pakistan raised in the year before). The reason behind these large funding rounds could be attributed to the need for rapid and aggressive market expansion for the Q-commerce proposition to work, which could act as a double-edged sword for the startups. On one end, achieving economies of scale is intrinsic to the success of Q-commerce venture propositions, which makes sizable growth capital not only a milestone in the startup’s journey but rather a key component of their market strategy. On another, the scalability of their market offering is a great attractor for VC backing. While the majority of Q-commerce ventures have adopted aggressive go-to-market strategies, other startups like Dubai’s Yalla Market put their weight on the hyper-localized aspect of the industry. By deploying E-scooters and bicycles, the UAE-based startup has designed its network to focus on the close vicinities, giving room for bracketed market control in the geographical areas they service. 

Data Sets from the November Venture Investment Dashboard, Q3 2021 EVM E-commerce Venture Investment Report, and Q3 2021 EVM Transport & Logistics Venture Investment Report were used in the development of this research piece. To access all insights, check our full suite of industry reports. 


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