Makook looks for life amongst dot-com ruins

Could Makook, an online auction site, become the Middle East’s first big business to consumer (B2C) Internet success story?

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By  David Ingham Published  February 4, 2002

"The market conditions are right"|~||~||~|Amidst all the dot-com doom and gloom, it seems to have been forgotten that there is one Internet model — online auctions — that works and one company — eBay — that is doing rather nicely out of it. Here in the Middle East, a fourteen month old startup called Makook is determined that it’s going to become the closest thing that the Middle East has to eBay.

Khalid Al Tayer, founder and chief executive officer of Makook, does not try to hide his company’s admiration for the world’s online auction leader. Nor does he deny that he wants Makook to become (and he believes it can become) the eBay of the Middle East.

So will Makook turn out to be another casualty of the dot-com boom and bust, or can Makook ‘do an eBay’ and become a thriving, profitable Internet business? Al Tayer argues that Makook has several factors in its favour.

Primarily, he says that the online auction concept, which connects consumers wishing to sell with others willing to buy, is proven and market conditions are favourable in the region. “From an Internet point of view, we’re seeing a boom in terms of Internet subscribers as well as Internet penetration in the Middle East,” argues Al Tayer.

On top of that, he believes the eBay model of buyers bidding against each other to buy a product fits perfectly with the Middle East’s culture of bargaining and haggling. “It’s up to us to tie together these pieces and make people understand this is a service you gain value from and that this is a service that’s available,” says Al Tayer.

However, whilst the region’s Internet users may be information hungry, they haven’t yet shown much desire to start buying, or in this case bidding, online. That, Al Tayer argues, is as much due to a lack of services like Makook as reluctance on the consumer’s part. “E-commerce is an extension of Internet usage; the only reason it’s not out there today is that we don’t already have Makooks and Amazons to cater to users,” Al Tayer insists.
||**||Fundraising and marketing|~||~||~|
Makook intends to start getting its message out there (and more on that later) once it has tied up the small matter of a fund raising round. When Arabian Business met Al Tayer in mid-January, he and his colleagues were gearing up to present their case to potential investors. Who those investors might be wasn’t disclosed, but a target of $3 million has been set.

That, Al Tayer believes, will be enough to take the company through to profitability. Funds, when they are raised, will be channeled towards employee development and improving the Web site and its back end technology.

However, aren’t investors cool towards anything that has the words dot-com anywhere near it? Al Tayer admits this is a problem, but replies that: “For us, there’s an easy answer to that: the concept works, the market exists. Let’s just make it happen.”

Makook has been up and running since July 2001 and has so far displayed around 5000 products for sale, with over 200 sold. Those figures are modest, but Makook has really been testing the waters so far, and will up the ante once its fund raising has been tied up.
Makook makes its money from transaction fees charged on the products sold online. Those fees are 5% on the first $100; 2.5% on $100-1000; and 1.25% on anything over $1000.

Makook itself does not keep any inventory, nor take responsibility for payment or delivery. It acts like a kind of virtual classifieds section, with the added ability for buyers and sellers to negotiate the exact price online.

It is then up to buyer and seller to arrange payment and delivery. “We’re a broker,” says Al Tayer. “We only generate revenue when people sell their product.”

Although for the most part, Makook is about connecting individuals, there is also room for the private sector to make use of the service. Businesses that have surplus inventory can post items for sale to consumers on Makook at reduced prices.

A partnership with Dubai Quality Group aims to encourage this. Makook becomes a preferred online partner for DQG, which gives it access to DQG’s dozens of member companies, all of which may have inventory that can be put up for sale on Makook. The partnership, and a similar one with Gitex Computer Shopper, offers an idea of how Makook aims to build up awareness without spending huge amounts of cash.

Khalid Al Tayer was so confident about the potential for Makook that he gave up a position with a local investment bank and declined a position in London to take up the dot-com challenge. Despite the fallout of the last two years, he says he is determined to build Makook into a household name not only in the UAE but across the region.

“The idea is to finally prove to the Middle East that a dot-com idea can come out, can live for five years, can be profitable and can be an anchor brand name in the globe,” he says. Time will tell whether Makook can make that happen.||**||

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