We’re on a mission to create a smart economy in ME: Mouchawar
Souq.com CEO reflects after record-breaking Billion Dirham funding
Entrepreneurs in the region have a great opportunity to scale their businesses with Souq.com after the e-commerce site secured new funding worth more than a billion Dirhams.
Last week, Middle East’s largest online retail and marketplace platform announced the completion of a funding round of more than AED 1 Billion (USD 275 million), the largest financing of an e-commerce business in the region.
CEO Ronaldo Mouchawar says Souq.com has a lot of responsibility as a local brand to deliver on its promises not just to users but also to the larger ecosystem of entrepreneurship and technology in the region.
The new investment will go towards scaling Souq’s business network, including its online payment platform PayFort, and its last mile delivery arm Q Express. “The main investment will however remain in our technology, in our efforts to making our marketplace platform much more scalable to our merchants,” says Mouchawar. “We now have an extensive merchant base and as their own businesses scale, they want more tools to enable them do that.”
An increasing number of customer are buying via smartphones, thus the need to continue investing not just in infrastructure but also in technology for recommendations and data analytics as well as the mobile apps, says Mouchawar. There’s also increased attention to emerging technology such as integrating logistics solutions with mobile addressing technology.
M-commerce today accounts for 50% of online shopping as penetration of smartphone deepens. E-commerce in totality was about USD 15 Billion last year in the MENA region and growing on average 30% every year. Adding new categories such as ride sharing with retail, this segment will be worth 20B this year.
Souq.com today attracts 45 million visitors a month with over 1.5 million items available for sale. “We feel this is a scalable space with the ability to create a lot of jobs and opportunities. It however requires a lot of innovation and technology as well as major cultural shift within our company, changing from a start-up mindset to start operating as a much larger organisation,” says Mouchawar.
The CEO says it’s gratifying to witness merchants on the site expand to millions in sales from very little when they began.
An increasing number of brands available on Souq.com, particularly smartphone brands, are exclusive to the platform. This, Mouchawar observes, is part of the company’s electronic strategy to bring new brands not yet available in the region as the mobile space evolves with an increasing number of new and exciting players. “We have partnered with Huawei with bringing the Honor brand to the region, as we did OnePlus One and Injoo. These are brands that provide a lot of value to the user,” Mouchawar adds.
This is illustrative of Souq.com’s commitment to the mobile space, Mouchawar asserts, in having the public attain technology at lower costs. Broadly, it also helps Souq.com in having larger penetration of smartphones, enabling a potentially new customer base.
Souq also continues to grow new categories and has added home, baby, health and beauty & fashion categories, with the aim of providing a single destination for the majority of customers’ shopping requirements, Mouchawar says.
Rather than view mortar and brick stores as competitors, Mouchawar advocates the benefit of an omni-channel strategy, saying traditional store businesses are welcome to sell on Souq.com to add to their physical presence. Souq will typically open an online store for them on the platform, allowing these brands maintain their identity and their own look and feel while also getting sales from the traffic. “Many of these businesses have websites, which although a great communication tool, do not help them much with sales due to minimal traffic. If their objective is to grow the business, we have the platform with over 45 million visitors and almost 60% of local ecommerce business. We can generate volume and traffic needed for these brands to benefit from the internet, enabling them reach a wider customer base than the ones they have today,” he adds.
Mouchawar says Souq.com has turned into a brand people have passion for, and speak highly of. “Conversely, we want to become the empowerment brand for people to create their own businesses. We have invested a lot in the infrastructure, and we can provide the opportunity everyone on the platform to access the same buyers,” he adds.
“We also want to leverage the trust the public has for our platform to become the true souk of the Arab World. We are born here and we want to see the region being innovative in technology. We want to be seen as the company that is always innovating around ecommerce and in online payments and logistics space while empowering our users in making better choices at better prices,” Mouchawar asserts.
As merchants in the region grow their businesses, they create more jobs opportunities. “We are not just creating jobs for our employees,” Mouchawar says. “Our merchants are growing and are also creating jobs. We especially desire to see the creation of smart jobs, creating an ecosystem, for young people. We have a huge population in the region and the more jobs we can create that are technology driven, the better opportunities which will be created in the future. The young people will be leaders in their own domains, creating their own platforms and their own business down the road. This is the kind of mission that excite us and a great motivator for Souq in the years we have been operational.”
The prevailing economic uncertainty in the region should serve as an impetus for traditional stores to explore new ways of growing their businesses, Mouchawar opines. Online sales offers a low cost way of doing their business, particularly on Souq.com where setting up shop costs very little. “This will get the merchant not only incremental business but also new segments and customers who may not be in their area. Second is the opportunity to acquire a different profile of customers. Online buyers generally tend to be of higher income spend and better educated, he observes.
On the demand side, customers are also on the lookout for more value for their money and this is where Souq can help by providing higher specs for lower costs especially in mobile devices. “Marketplaces are inherently competitive in nature so by being a purely online business, we can afford a better cost structure and better value overall. Overall, we expect to see growth in the number of suppliers and buyers growing price conscious and turning online, we think the platform will continue to grow at similar growth rates as before, despite any economic downturn,” he concludes.