The E-Commerce Startup Survival Guide

Have you ever wondered how to successfully run an e-commerce business in the MENA region? In this webinar, Hosam Arab, Co-Founder and CEO - Tabby joins Noor Salama of MAGNiTT, to share his e-commerce startup survival guide.

They explore several different topics, including:

If it is too late for brick and mortar groups to move online as more people are now transacting online due to COVID-19

Hosam says no - COVID-19 has shown that we need to have even more e-commerce happening online. A lot of people have been caught off guard who had digitalisation plans to cover the next few years, but this has now sped things up.

The question is, how do we go online? Does that mean, setting up your own website? Buying your own inventory? Or is there more of a collaborative approach, where we can we use what is already out there. He believes it should be the latter, if there are players that already exist that can help you, you should be open to this.

The different challenges that e-commerce startups should be aware of if starting up a business today

Hosam discusses funding, which will determine what kind of business model you want to pursue e.g. do you want your own inventory or will you use an existing inventory. Hosam shares a personal previous challenge of using what was already out there and using existing infrastructure, which was actually broken and so caused more problems. Choosing between using your own inventory or not, can be related to experience. It can be expensive to own your entire inventory and take the risk, but then again, there may be a lack in experience when you work with suppliers who may not be able to suit your demand.

If Cash on Demand (COD) in e-commerce purchases in the region, is still a majority

COVID-19 has caused a forced shift away from COD, Hosam shares. If we look back at where we were 5-10 years ago, he says that he did not want to be the first company to make the shift, but now is in fact a good time for companies to switch it off, try it out and see how the customer reacts.

What to do if you’re an early stage e-commerce startup looking to fundraise during this time

Hosam says we are seeing funding drying up, LPs are holding money back until the situation clears up, and that things will get worse before they get better. VCs were saying to make sure you have 18-24 months of runway, which might not be easy. Therefore, the option may have to be, to either raise more money, which is challenging now, or focus on priorities and ensure that you are cost-cutting.

If startups should merge to become more robust and deal with challenges

Hosam agrees that people need to be open to working together. Now is the time. As funding starts to dry up and there is less money to spend, it will get more and more challenging. If everyone has bought inventory for their e-commerce business and there is not many ways to sell it, everyone is burning money. Therefore, now is a good time to consolidate and if there are ways to look to come together, they should explore it.

When the right time is to pull the plug

There may be a time when the writing is on the wall and a product doesn’t fit the market. If you’ve been trying to do the same thing for 2-3 years and you still are unable to scale it, maybe you need to change the business model or look at something different, Hosam explores. If you haven’t scaled efficiently after 5 or so years or have seen a path to profitability, then you may need to review.

If post COVID-19, there will be a shift in e-commerce shopping behaviour within MENA

There will be a semi-permanet shift to digital shopping, Hosam believes. He opens up about knowing people who have shopped online for groceries for the first time. They had their fears, concerns and doubts about what kind of experience they would be receiving shopping online, but now their mindsets have been changed, and we will begin to see a shift.

If discounts act as an incentive to drive people towards using digital forms of payment (in order to move them away from COD)

Hosam believes that there are two ways to switch people off COD:

1. Disincentivize them with a cost on COD
2. Incentivize them with a discount elsewhere

In Hosam's experience, discounts did not work very well, as once switched off, people went back to COD. They instead tried to disincentivize with a cost on COD, but in reality, it didn't change much.

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Other topics included if startups should be afraid of corporates moving online, if there is room for other formats and experiences in e-commerce, if single category e-commerce starups will become the trend in the region, what industries will flourish and which ones will take time to recover post COVID-19, and much more.

To check out the full discussion, watch the Webinar below now.



Here are some insights from the polls we launched during the webinar:

  


E-commerce deals in MENA-based startups have tripled from 2016 to 2019. Find out more details behind this trend and many more in our 2019 MENA E-commerce Venture Investment Report