Discussing Ecommerce Solutions in Kuwait and the GCC with Salem Marafi, Co-Founder of Ordable

Interview with Salem Marafi, Co-Founder and General Manager at Ordable

What is your assessment of the ecommerce sector in Kuwait? Do you have government support? Is it well received by the customer, the public, the businesses?

Generally, there is an entrepreneurial culture in Kuwait. As the younger generation grows up, more and more of that becomes online where younger people are launching businesses. Naturally, they would launch on already available online platforms, whether built for ecommerce or not. Their online ecommerce solutions, when we think about them traditionally, have transformed. Before, we thought about ecommerce as a web shop. Today, it might be a social media platform. Social shopping or social ecommerce has really become a thing in the past five years. During COVID, specifically, people sold on these social platforms and the rate of growth of online sellers on these social platforms grew significantly in the past two years. In 2017, I commissioned a study to see how big ecommerce was going to be in the next three years, by 2020. The number in the GCC was projected at about 20 billion, and the actual number is 28 billion. There were three major factors that helped this that started in 2019 and are still ongoing.

First is the major impact of COVID on traditional brick and mortar stores. Fundamentally, whether you are a large business or a small business, you have been forced to change the way you do business. A lot of mega brands, every brand under Alshaya, for example, started to think about how they could start to sell online, how they could put their brands online. Some of our existing customers at the time came and approached us and asked if there was an express version that they could launch immediately. We would have a conversation with them and they would want to take their entire catalogue, hundreds of thousands of SKUs, online in the next day. The likes of Al Hajri Pharmacy, Al Wazzan Group with iconic brands like KITCO, were huge businesses stuck in a traditional way of doing business and they suddenly needed to transform. That was brought on by the sudden change in the macroeconomic environment of the country. This was seen across the Gulf region and the MENA region. In Kuwait, it is a peculiar market. 80% of businesses are within the food and beverage industry in some way, shape, or form. 20% is not. This is just by number of physical, commercially licensed businesses, not to be confused with volume of business. When we talk about unlicensed businesses, that number shifts again and that is an interesting market too. Instagram sellers, for example, are unlicensed, but can operate online and reach customers.

So, within the food and beverage industry, there was a shift in 2019 that lasted up until summer of 2020 where there was overcrowding in what is known as the aggregator market which is marketplaces that list other businesses and sell their products such as Delivery Hero, Talabat, or Carriage at the time, Deliveroo entering the market. In Saudi Arabia, it was rapid growth of a company called Hungerstation. In Bahrain, it was Talabat with a complete monopoly over that market. New competitors are starting to come out. The issue that is when you get overcrowding in an aggregator model, the individual business becomes less discoverable and with less discovery, you get less sales and with less sales, you have a problem. It is a problem you do not want during COVID because people were getting online to subsidize their brick and mortar rental. That gave birth to yet another adjacent industry of cloud kitchens and dark kitchens. People were thinking of ways to let go of their physical presence but still hold on to it in a way that they need their people to create this food somewhere. That gave way to business models like ours with small businesses in the food and beverage industry looking for ways to do things by themselves. Specifically, they were looking for three factors. They were looking for control, independence, and saving costs which we were able to give to them.

The third major factor, which was extremely true in Kuwait where we started, was an extremely volatile socio-political environment. The government was stuck making decisions for the safety of the people and they did a great job of this. Kuwait moved very quickly trying to protect people from the harsh impacts of COVID and also putting in legislation that can control processes for the food and beverage industry in how you go to restaurants, how you order, if you are even allowed to go out. How that manifested was that you would wake up one morning and there would be a new legislation that says you are not allowed to visit restaurants, you can only order online. The next day would be that you are no longer allowed to order online. The next day would be that you are allowed to order online between certain hours. When you get a fast changing environment, you need fast changing solutions. That gave way to business models or ecommerce solutions like ours that had that flexibility where a business can wake up one day, press a couple of buttons, and change the way their business operates. This is the opportunity that we saw that was the general assessment of the ecommerce environment at the time. In general, Kuwait is a merchant country which means businesses really drive the economy. We have a couple of mega industrial level companies at the head and then the rest of the economy is driven by startups and small businesses.

What are your competitive advantages? How do you distinguish yourself from other players in the market?

As a company today, we are a regional company. We are servicing customers in every GCC country – Saudi Arabia, Kuwait, Bahrain, the UAE, Oman, and Qatar.

Today in in the region, if you were a food and beverage company, for example, selling burgers, the way to reach customers is to set up shop for brick and mortar or have a kitchen somewhere you can operate out of and then start to sell somewhere online because people order online. The only place that was available at the time was aggregators. So, we would set up an account on an aggregator and we would start to sell. From day one, we would start to lose anywhere between 20% and 30% of our margin because that is the commission you pay for getting visibility. That is a huge amount for a burger business. The margin on a burger is really not that much, especially because much of a burger is imported. So, you lose quite a bit of your margin just producing it and then the rest of it is lost getting it to people. The first alternative or the first benefit that we offer on top of that is that you do not lose that 20% and 30%. You are already doing your own marketing. If you get a customer, send them to a channel that does not cost you 20% to 30%. That channel would be your own direct website where your customers can go to and find a familiar shopping experience. Our shopping experience mimics what customers are used to. So, if you are ordering burgers, you get a burger shopping experience. If you are ordering pretty little ballerinas, you get a little ballerina experience. We built a product agnostic platform that offers cost savings.

The second factor is that discovery becomes incrementally more difficult on aggregators, and then you end up having to pay for discovery. These aggregators have advertising tools that are super, that work, but then you pay more. The more you pay, the more you take away from your margin. You are also paying to be next to your competitor. If I am on a Talabat shopping experience and I am looking for burgers, I am going to see the burgers that we have and a McDonald’s burger, so I am potentially losing a customer. So, independence was an important factor. We are the only white label solution in the MENA region for direct to consumer web apps, which means that when people land on your store, they only see your brand. They do not even see Ordable‘s brand. Whereas if you go to a Shopify store, you will see that it is powered by Shopify. If you go to any other store, it is powered by whatever piece of technology is trying to ride on your marketing. We do not piggyback on the success of our customers.

Then there is control. We were so good at delivering control that these larger aggregators started to copy what we delivered because our customers started asking for it. For example, we give complete control over the ordering experience: how products are merchandised, what time you receive an order, how much lead time is necessary per product. We give control over your delivery areas. When COVID hit, one of the first reactions in aggregators was to limit the delivery zones or the distance that each restaurant could deliver to because they have their own logistics providers and they are limited in terms of logistics capacity. We offer a better alternative. You decide your delivery zones and we will integrate with multiple delivery providers and you can choose from them. You are in control of your delivery providers. You have an on demand delivery network from not one but potentially every delivery provider in the country. Control was a major factor that gave us strength on the next best alternative. When we think about direct competition from international providers, such as Squarespace or Shopify who we aspire to compete with, we live on that stage in our minds. We plan to take a large share of their market internationally. We already have done that locally. We are local and our product is a turnkey solution that comes in English and Arabic, the local language. It is very easy to use. You do not have to hire a programmer, you do not have to understand how to change a theme, you do not have to figure out if you need to turn on this widget or that widget to have something show up. All you need to do is decide to subscribe and it works.

The last thing is speed. The most important thing is how quickly people can go online. “Struggling” is an understatement. Our customers were suffering. We would sit with clients and they would ask us if we could get them online tomorrow and the answer would be yes, we could even get them online today. When we are talking about regional or local competitors, in terms of feature sets, we offer the broadest. Our next direct competitor offers about 20% to 30% of the feature sets that we offer. So, there is a lot of value. We are an extremely open platform. Other platforms are closed. If you go to a competitor in Saudi Arabia, they will be partnering with one payment provider and one delivery provider. They are set up in that sense to maximize what they can get out of their integrations. We integrate with every payment provider in every country, which means that our customer has choice. For example, in Kuwait, on the payment gateway side, from day one, we partnered up with some of the best payment gateways in the region such as Myfatoorah, Hesabe, Tap, Bookeey. We continue to onboard payment providers that wanted to get more transactions and we delivered those transactions to them through our customers. It is a win-win solution on the payment side. In terms of delivery providers for international delivery, we worked with DHL to get exports going. In April of 2020, the country shut down and people were looking for ways to at least sell somewhere. So, exports started to pick up and that is when we when started to work with DHL. In terms of local providers, we work with Armada who is a delivery integrator. It is an Uber for delivery. All that our customers have to do is choose to subscribe with that service, press a button, and a driver would suddenly appear at their shop to deliver. We did the same with OGO, Go Wagon, and other providers. We worked with Quick Delivery as well for business to business setups. Our partners have become an important part of our competitive advantage.

Customers also get a level of insights that they would not get with other clients. My co-founder and I come from an ecommerce and logistics background so we are bringing industry level insights with things that we used to look at at Agility, Amazon, and Facebook. We built in these automated reports to give a home business or an enterprise business insights that you could never see before. One of the reports that we like to showcase is a segmentation report. Every time somebody buys, it automatically resegments all your customers to show the customers that need some attention or that are at risk that you might be about to lose so you might target them on some sort of marketing campaign. We can then show your loyal customers, customers that continue to buy and spend a lot, customers that frequent your business a lot. We can show the customers that do not come often, but when they do, they spend a lot so when they are on your website, they should get some sort of promotion so that they can spend that big money again. That is all automated. So, simplification and automation are a big part of what we do for both our customers and internally. We were our first customer so we lived some of the challenges and we built solutions for our customer at the time. That has been the DNA of how we build. We are extremely close to our clients. I remember once driving a good hour to install a printer so that somebody could print the invoices from our system. It is completely unrelated, but the customer was struggling. We do not want them to sweat it. We just roll up our sleeves and start to build solutions for customers that need it. Our research pipeline, our feature pipeline comes from our customers. It does not really come from inside the company, sitting behind the desk thinking what else we can build. It is really through conversations, focus groups, live chats, outreach from our success team to our clients. We consider ourselves in the SAS world, software as a service. We really focus on the service much more than the software. It is easy to spin up a software company today. We could do it in the next hour and you would have a product that is a software that could potentially be used as a service. But my co-founder Mona Al Baker and I knew that if we risk the level of service to our existing clients, then we risk the entire business. That is really part of who we are and we will continue to be that in the long term.

What are the challenges you are facing in the sector and for yourself?

There are three major challenges that are here to stay for a while. The first is infrastructure. There is a lack of infrastructure in every locale that we have been to in the GCC. The last mile delivery is probably the most difficult industry to be in. Our hearts go out to companies trying to solve problems there, especially in the GCC. Moreover, the customer expectation in the GCC is such that they have been conditioned by large players to have nearly unrealistic expectations. I am one of these customers. I expect delivery in less than 30 minutes, otherwise, I am upset. In terms of infrastructure, our roads are not set up to be able to get from point A to point B in 30 minutes. It is impossible. If you look at the distance between where I live and where I work, it is a 17 minute drive and I get here in an hour. We have a fundamental issue around infrastructure. This is not necessarily true in terms of connectivity because the country has invested significantly in connectivity and so has the private sector. Companies like Zain and Ooredoo have done a great job at delivering fast internet to everybody. This is also true in Saudi Arabia, in Bahrain, etc. International delivery and cross border delivery are still a very small percentage of net value that goes through the industry. Amazon is starting to solve this problem by building warehouses everywhere and starting to work with existing last mile providers and cross border providers. We expect to see that change quickly, in the next five years, but as it is today, it is very difficult. We get faster deliveries from the US through companies like Amazon and iHerb than we do from Saudi Arabia and Kuwait, which is mind blowing. Infrastructure impacts our business directly. It is the last step of everything we do. In getting something to a customer, if it does not get there, it does not matter how good our product is.

Payment providers my heart goes out to as well because the infrastructure on payments is heavily regulated. You have a single payment provider in every locale, whether it is KNET in Kuwait, Mada, in Saudi Arabia, Benefit in Bahrain. They are the glue between every payment provider, which is good in a sense because it gets regulated, it becomes the central point, and when things are good, it is good. With COVID, transactions skyrocketed. Overnight, you would get 100 times the transactions that you were getting the night before. If they announce a lockdown, people start to buy in bulk online. Payments infrastructure failed. Customers could not pay online. Businesses could not get any money. They were set up in a monolithic way with a single provider for everything. Now, we are starting to see competition from international markets come into the region where their network is decentralized. We have the likes of Stripe entering the UAE, the likes of Checkout working with local providers through SWIFT or VISA and MasterCard, without having to work with the local infrastructure that companies that we service are forced to work with. The decentralization of the payment network would definitely help, but that is a big challenge. The way we are addressing it is by at least giving gateway options, so that if there is any failure on a provider side, then we have alternatives. But there is no alternative, for example, to a debit transaction that has to go through the KNET network.

The final challenge is education. Even though a lot of our customers in food and beverage have gone online, it is a process to educate them that this is a long term benefit to them. Teaching people how to go online, how to sell, how to look at their business, what are the numbers that matter was core to why we started. There is still a long way to go in terms of allowing people to understand an ecosystem. We are presenting an omni channel approach to selling versus seeing us or another provider as an alternative. For example, often we tell our customers that they need to be on every aggregator. It is marketing. You need to get people to know you. Once they know you, it does not make sense to send them to a costly channel. This conversation is an education piece and where it happens, whether with our sales teams or online or through conversations, is still lacking in Kuwait. Kuwait is probably the most advanced in terms of direct ordering. When we talk about Saudi Arabia, which is 10 times the size of any other market and which is a core market for us, it is fragmented, it is huge, and there is a lack of awareness in possibilities from a commercial standpoint.

What is your medium-term vision? What are you planning to be in three years’ time? What do you want to achieve?

As a company today, we are a regional company. We are servicing customers in every GCC country – Saudi Arabia, Kuwait, Bahrain, the UAE, Oman, and Qatar. We started in 2019 and we internationalized or regionalized in 2020. We focused on our customers and we entered those markets with our customers. We grew companies from Kuwait out and we built solutions to help them scale and scaled with them. We have been either throttling our growth to make sure that we continue to grow our customers or accelerating our growth to make sure that we are beating the competition. We are on track to do that again this year and we are on track to do it next year. We might overachieve next year because we will continue to expand in the region. We are going to have a fully fledged operation, meaning a full team across Saudi Arabia, by the end of this year. We will continue GCC expansion in 2022 with teams in Qatar and the UAE. Towards the end of 2022, we will establish in Egypt making us a MENA company. Egypt is a huge market that is growing faster than any other kind of Arabic market. Moving forward, 2023 to 2025, we will start looking at APAC countries and we are already doing our research there. There are many synergies or similarities between markets. Using connections that Mona has within our direct network, we get educated and our customers educate us about where they want to go. We will only go where it makes sense for our existing customers. We do not want to be blinded by our own ambitions. So, the APAC region is really interesting for us. Specifically, Singapore is a market that exhibits very similar social, political, and economical characteristics as countries like Saudi Arabia.

Are you looking for investors or technological partnerships?

It is important to state what it is that we want to be, because it also says what it is that we do not want to be. Ordable is an ecommerce solutions provider which means we want to be the fastest way for any business to grow online in any country. Wherever there is an order, there is Ordable. This is how we see ourselves. We want to be an order facilitator for any ecommerce solution. This is what we started out to be. This is where we want to continue to focus and we want to continue focusing on this for our customers. We bootstrapped because we wanted to stay true to our customers. Today, we are in a very privileged position. We are a post revenue profitable company. We started to become profitable within the first year and that was mainly due to the environment that we launched in. It allowed us to quickly grow. When we invite conversations about financial investors, we are looking for investors that share the same vision for our customers. We want to protect that trust in us. We have had conversations with investors that really did align with our views and now, it is a question of timing. We want really long term thinking investors. We are less interested in growing for the sake of growing. We are the most open platform in the region. We want to be the most open platform on the planet. We are looking for partners that help us solve our challenges, delivery providers, payment providers, point of sale solutions that are looking for online ordering methods. We have our own point of sale suite. We are so open that we work with some of our competitors. One of our competitors is a payment provider that offers web stores. So, we offer their payment solutions to our customers and we offer our stores to their payment customers. That openness is also part of our DNA.

What has the journey been like to get to this point for you as a business and as an entrepreneur?

This is not my personal first rodeo. I have started companies in the past and some of them still exist that I am no longer a part of. I do not believe in luck either, but I think I was lucky. My partner, Mona, is excellent at executing. If the team did not start out right, it would not be going right now. I genuinely appreciate the luck that I have had and to have been in the right place at the right time and actually being able to convince her of going forward with this.

ABOUT ORDABLE: Ordable is a single platform with powerful features. Stemming from a local home business that scaled 20 times in 1 year, Ordable has built a solution that works understanding the needs of small and medium businesses. The online platform is integrated with delivery providers, payment providers and inventory management systems, that cater to local business needs. Start your own online store today!

For more information, please visit: www.itsordable.com.

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