Let’s Talk About Life After Amazon In MENA’s E-commerce Sector
By Saad Umerani/ Inc. Arabia
SOURCE: Inc. Arabia - Let’s Talk About Life After Amazon In MENA’s E-commerce Sector
E-commerce startups in the Middle East search for their identity.
With its acquisition of Dubai-based online retailer Souq for $580 million, Amazon is building a regional logistics powerhouse.
Souq may add a handful of local fulfillment centers to Amazon’s arsenal, but that investment can only add fuel to the fire in the $4.9 billion and rapidly growing Middle Eastern e-commerce market.
As Amazon grows its presence in the Middle East, the region’s e-commerce startups need to differentiate and focus to maintain their footing in a rapidly evolving market.
But at the end of the day, none of this is really new. The best e-commerce startups in the region have been focused on mastering a single defensible market for some time.
Rather than competing with Amazon, savvy founders realize that the Middle East offers unique opportunities for products that are designed for specific markets.
Startups that can offer goods tailored to substantive, yet niche, customer segments will see growth as agility continues to dominate scale in these verticals.
Meanwhile, without differentiation, more horizontal plays like Noon will struggle to find their edge against Amazon —the US’s Jet.com being something of an M&A-driven aberration.
At Enabling Future, it’s our job to find the white space, regardless of what decisions big tech companies make. And one of the most exciting areas for growth we see is in B2B e-commerce.
To sell to other businesses, you need to painstakingly build up corporate relationships.
But in return for the effort, you gain a moat around your business that can’t be quickly bought with money. And the high volume and regular cadence of purchases doesn’t hurt either.
OfficeRock.com, a Dubai-based commerce startup backed by Wamda, Jabbar Interest Group and Enabling Future, is executing this thesis for the online sale of office supplies.
The company is experimenting with B2B sales tactics for furniture, paper, equipment and more. This is more than a sales decision, it’s a strategic investment to build the tools and operations necessary to interact with corporates.
“THERE HAS BEEN A LOT OF TALK ON B2C BUT NOT B2B, WHICH IS TWO TIMES THE SIZE OF B2C GLOBALLY,” CHRISTOPER QUEITSCH, FOUNDER OF OFFICEROCK.COM EXPLAINS. “IT’S A LOT MORE COMPLICATED WITH CREDIT APPROVAL PROCESSES ETC, SO IT’S IMPORTANT TO BUILD THE TOOLS AND OPERATIONS NECESSARY.”
Stepping back from B2B, plenty of other startups are working to excel at sales in specific verticals.
Namshi.com is executing at a similar level in the fashion space and Trolley.ae is making inroads for grocery. Online retailers that can aggregate formerly inefficient, decentralized, brick and mortar stores into a single one-stop shop hold a particular advantage.
Brandless is following this aggregation model with its own generic spin to keep costs low.
There’s also a strong cohort of startups looking to democratize e-commerce to narrow the advantage of tech giants.
Startups like ClueTap are building tools that will allow up and coming merchants to compete without needing to forge their own payment and logistics solutions from scratch.
This is a big deal for a region where 50% of sales are still done with cash on delivery.
With ClueTap, sellers can quickly create their own online store and advertise with Google and Facebook. The startup has demonstrated traction in tough markets like India and the team is looking to expand into the Middle East in the near future.
And the best part about this approach is that ClueTap can actually work side-by-side with Amazon, enabling small merchants to list their own products on the site.
“WE DO NOT COMPETE WITH THE LIKES OF FACEBOOK, EBAY OR AMAZON,” ASSERTS HEMANG KAPUR, FOUNDER OF CLUETAP. “WE SEE OURSELVES MORE AS COMPLEMENTARY TO THEIR CORE BUSINESS.”
Details play a big role in the success and failure of e-commerce startups. Serious players need to have strong sales teams and robust product catalogs. But they also can’t forget to treat customers right and invest in intangibles like user-friendly online interfaces.
At the end of the day, Amazon and Souq are more market makers than market breakers. If anything, the consolidation only makes existing white space more clear. And what ultimately fills the void will be of as much value to investors as it will be to Amazon.
SOURCE: Inc. Arabia - Let’s Talk About Life After Amazon In MENA’s E-commerce Sector