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Kuwait Report
Marcopolis presents the Kuwait Report focused on the investments, doing business, economy and other topics featuring interviews with Kuwaiti leaders. The sectors under review in this issue are industry, oil and gas sector, investments, banking sector, telecom sector and many more.
InterviewsAugust 03, 2021
Ali Al-Ebrahim Presents COFE App: The Online Coffee-Centric Marketplace Made in Kuwait
Ali Al-Ebrahim, Founder and CEO of COFE App
- Written by Sandra Francisco
- Published: August 03, 2021
Interview with Ali Al-Ebrahim, Founder and CEO of COFE App
What kind of challenges are you facing in the industry and the region and what are you doing to overcome those challenges?
For us, we see challenges as opportunities. In the past year and a half, it isn’t just about the challenges posed by the ecosystem but also those posed by COVID-19. And this is not specific to our industry, it has been challenging for everyone be it big businesses, startups, and in our case as well being a tech startup. For COFE App it has been a period where we not only figured how to survive, but also grow and scale higher. The biggest challenge for us was keeping the momentum going, we had only just opened UAE and KSA when the pandemic hit and government regulations resulted in lockdowns and suspension of various retail activities. What really helped us sail through was having a great team, that was able to quickly adapt to the situation, and come up with solutions that gave us greater flexibility.
Are you still dealing with those issues or are you seeing a recovery now?
It has been a period of learning for us, things are definitely getting better, but it will be a slow trek to normalcy. Not being able to see colleagues for almost 6 months, not knowing what is to come next and the general uncertainty have been the most difficult parts, but it is definitely getting better. We have adapted to the situation, which makes coping better and with improved systems for remote working, we are getting comfortable with the new normal. This period has also helped both brands and users see the value of online, making the market more lucrative in the long run. Adapting quickly, pivoting strategies and changing tactics is definitely something all of us have learned over the last year.
You started as an online app and a virtual presence. How did you use that to your advantage during this time?
We are an online marketplace. We have been from the beginning and this is what we will continue to do. We are not in the business of making coffee, but rather we shorten the distance between you and your daily coffee. One of the big things that we did during the pandemic was introduce our e-commerce segment – COFE Store. Coffee shops can sell beans, capsules, machines through our application, creating a whole new revenue stream for them. In the past we have also introduced the COFE Rewards Program. Before the pandemic, coffee shops had a lot of customers offline, people that come to the coffee shop, however coffee shops failed to create any data base about these customers, and how they can be targeted. Usually, someone comes to the coffee shop, takes their coffee, and then leaves or sits down for a while. Our customized COFE Rewards program, rewards customers with the brands they are loyal to, be it Costa, The Coffee Bean & Tea Leaf (CBTL), Caribou Coffee, Nespresso, and any other local specialty or international brands they prefer. These coffee shops also use our platform to connect and communicate with their customers, share offers, re-target, reward them, etc. During the pandemic, we tried to introduce services and offerings to create additional revenue streams in the face of all the COVID regulations being imposed. Originally, the COFE Store was meant to release in October 2020, but when the pandemic hit, it took us only three weeks to introduce that feature to the app and then scale up from there, a feat we are extremely proud of. One of the biggest decisions we made together with our board is to always treat our coffee shops as our partners. And if the going gets tough, we are here to support them, during the peak of the pandemic we decided to not charge sales percentage until things started to pick up again, this move helped us convert more brands, because somewhere they understood that we at COFE are long term partners. During the pandemic our vendor acquisition went from about 59 brands to over 350 brands. Coffee shops needed an online presence, in addition to delivery options, as well as customized solutions like curb side pickup, car pick up, etc.
What is your scope of business and your presence in the industry?
We are an online marketplace. We have been from the beginning and this is what we will continue to do. We are not in the business of making coffee, but rather we shorten the distance between you and your daily coffee.
I am the founder and CEO of COFE App. When we started the whole concept, we saw that all major industries like hospitality, food, and even the flower and laundry business had marketplaces. And yet coffee and tea, the fastest growing beverages around the world had no real marketplaces. There are some brands that have their own apps, but there was nothing at that time that offered everything coffee on one platform on a regional or global level. We saw this opportunity and felt that this was something that would also contribute to the ecosystem on the whole. When we officially started in November 2018, there were some challenges with regards to introducing the right set of features. Again, we are a marketplace not a logistic app. Many people thought that we did coffee delivery, which we did, but delivery is one service of five or six other services we provide. We introduced click and collect at the counter, the customized rewards program, the virtual drive thru, the COFE Store, etc., to create more specialized offerings. About a month after we started, in December 2018, there was a huge announcement and huge report in the States that the Starbucks app had more mobile payment users than Apple Pay and Google Pay at over 23.4 million. This report supported our hypothesis that the high number of users are likely to interact with an application like COFE. The effect of rewards program on conversion rates were highly positive. We used all of these reports and studies to refine what we offer. Instead of users having to download a number of apps for every store, they can download COFE App to access all of them on one platform with even more features and services. For our customer base in Kuwait, UAE, London, Istanbul, or in the future in the States, they can access their most loved brands in one place. Of course, this compounded with the fact that tech is an up and coming vertical with huge scope of growth, online marketplaces and e-commerce is growing, COFE App was a no brainer. Our confidence has also been built further by seeing some of the big deals that have happened in the last decade or so, like Costa Coffee with Coca Cola (over $5 billion acquisition), Nestle getting into the Starbucks capsules (over $7 billion). The valuation of Blue Bottle which is a specialty coffee shop reached about $700 million. There are many other big deals such as Pret a Manger with JAB Holding Company ($2 billion), Krispy Kreme ($7 billion), Panera Bread, Caribou Coffee, Espresso House, and others. We are assuming that in the next five years, it will be 10 times bigger than what we see now because of the new players being introduced to the market. Another aspect which is very interesting is the trend that we see of people getting into directory apps or super apps that bring together all the features that they provide. A great example is Careem and others in the region that are doing this. There is also a huge trend in the West where people are getting onboard with specialized marketplaces. There is Slice in New York, which is an app for pizza joints, Chowbus for Asian food, as well. It’s natural for people to want something specialized for whatever they do often, whether it is on a daily or weekly basis, same goes for coffee. In the markets that we are in, people are coming onboard and the retention rate is quite high, owing to our rewards program, from an app they use on a daily basis to get their cup of coffee.
What makes COFE App different? What is your competitive advantage? How are you making yourself stand out with all of these other coffee options?
One of the biggest challenges was to bring all the various coffee and tea brands onto one platform. Convincing them that with any another app they are just buying services, but with us they are also able to offer their loyal customers a rewards program that gave the points to get benefits, only further strengthening brand loyalty. Initially in 2018-19 it was about getting bigger franchise chains onboard; this gave the smaller specialty brands a case for working with us. We have always been clear that we complement our vendors, not compete with them. Even when they have their own apps, we give them yet another revenue stream. For example, brands like McDonald’s and Costa Coffee also have their own apps, and yet they see the value we bring to their brands as well. We focus on creating accessibility. We create user experiences that are simple yet enjoyable. And of course, localization. The coffee market, and the FnB in general, is a very fragmented market. Most of them are franchisees. They do not own the brand. For a franchisee, it is very hard to build an app for a brand he does not even own. So, he wants something where he can compete with other apps and big brands. We are leveling the playing field, by offering everything from language support to payment solutions and targeted marketing campaigns. This is what is helping us scale even more and this is what makes us different.
How many brands are you working with now and what is your goal?
We currently have over 550 brands across our markets. We closed 2020 with 350 plus brands. During COVID, our numbers increased five times when it came to vendor acquisition. From here on, we are targeting to close between 800 and 1000 brands by the end of this year.
Are you seeing the success of the coffee market and COFE App as a reflection of the culture in the Arab region?
In the region here, hospitality is a big thing. If you go to Dubai, any place, any city, you will be welcomed at the beginning with Arabian coffee. Hospitality is offered through coffee and tea. If you look closely, this is true of many cultures around the world, from Scandinavia to Southeast Asia, Latin America, and the States – coffee is a common thread. Historically, coffee trading started from Mocha Port in Yemen, and now with COFE App we hope that the region will once again lead the coffee marketplace into a new era. During our user research, we found that coffee is also associated with getting a moment of peace. Where someone can just sit down for a moment, in the daily rigmarole of life, especially recently. A lot of people also have their own daily coffee rituals. COFE App was never meant to be regional, our eyes have always been on being a global platform. With Istanbul and London already in the soft launch phase, we will very soon be expanding to include more markets.
What is your presence in the region and internationally now and what are your plans for international expansion going forward?
For our first year, the number one focus was bringing the brands all together on one platform. The second year was about trying to find the right business model that will continue to work long term and I am happy to say we have achieved that as well. Now, we are looking into greater tech scalability, to create a global app that can support one million plus customers. After that the sky is the limit. We are not a logistic company. We are not competing with Careem or HungerStation or Talabat or others. We see that we compliment them. They do our delivery for us and that is a good thing because when these players sign with us, they do not sign with one brand, they sign a huge deal. That means that we are lean and scalable to open any new countries just by signing the coffee shops, having them ready regarding what reward points they want to introduce, and the number of branches and services they want to roll out. It’s as simple as that. Dunkin in Saudi is a great example. Dunkin Saudi is one of the biggest brands in the region. They have over 600 stores in KSA alone, and we were able to roll out this on COFE App in a fairly short time.
Are you looking for any technological partnerships or investors to partner with on that side to bring COFE App to the next level?
When it comes to technology, we prefer to keep it in-house. With having closed our Series B round recently, one of our major focus is going to be the tech aspect. We will be strengthening and growing our own team of engineers and tech management. With tech being our biggest asset, a large part of any future fund raising will also focus there.
What are some of your success stories that you are proud of?
Before starting this startup and having things rolling and then growing even more, I did not think that building a team would be this challenging. Bringing together the right team and culture is one of the most important aspects of building a successful startup. With a team which is now 100 members strong, this has been a remarkable journey so far. If you had asked me in 2018, when we were three or four people working on everything, if we think the COFE Family would grow so quickly, I would have said no. And it is not just these 100 people, but their families that are also part of our extended family. With so many people depending on us, we take our responsibilities to them even more seriously. Our colleagues work out of our offices in Kuwait, UAE, KSA, Turkey, and anywhere else in the world, being made more and more possible with remote working.
Again, the biggest challenge in the beginning was bringing all the coffee shops on one platform. This was difficult, because people don’t always buy into something so niche. It has been a slow and steady process, building it one brand after another, getting people to see our vision and everything we were bringing onboard. With the team soon closing in on 800 to 1000 brands, this is a very big achievement for us. This is something we are hugely proud of and it was a big challenge to make.
The third aspect, which I think is common for most startups is the fundraising aspect. Growing and scaling are very intricately related to fund raising. With our Series B round closed very recently, we are proud to have some wonderful investors on board, who not only believe in us but also make us stronger with their own experience and expertise.
What drives you to do what you do? What is your inspiration?
I am always driven by trying to make this world a better place. On the face of it, to people this may just seem like a coffee app, but it isn’t just about the business aspect. It is also about creating job opportunities, and building an ecosystem where more and more people are able to pursue their passion. Especially, in Kuwait and the GCC in general, we have most of the key factors to try to do something that makes a positive impact in this world. We want to have something that not only is successful in the region but on an international level. For us, our partners, our team, and everyone in COFE, it is not about being successful in Dubai, Kuwait, Riyadh, and other markets. It is more about being successful in London, Istanbul, New York, and globally. This is the inspiration for us to grow and to make it happen. It is always inspiring for me when I see the team. I love our team. I love seeing them every day. Just thinking about the families putting their trust in me and in the vision is really something that makes me more passionate and drives me even more, even if it is one or two steps, to keep the momentum going is key. I really believe in the chain reaction of good, opening houses, sustaining nature, and having the kind of cycle where we send positivity out through our daily actions, to receive more of it from the universe. I am grateful for everything we have done so far, and to all the people that I have crossed paths with and had the opportunity to learn from. Things are headed in the right direction and I hope that the decisions we make hence forth will keep us on the path of shared success.
For more information, please visit: www.cofeapp.com.
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