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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.
InterviewsMay 18, 2021
E-Commerce, Logistics and Property Development in Kuwait: Ali AlMatrouk Presents Jadeite Group
Ali AlMatrouk, Vice Chairman and Managing Director at Jadeite Group
- Written by Sandra Francisco
- Published: May 18, 2021
Interview with Ali AlMatrouk, Vice Chairman and Managing Director at Jadeite Group
What is the history of Jadeite Group? What subsidiaries do you work with directly?
The Jadeite Group is a company that was started back in 2016 by my parents. Our family goes back in business since the late 1800s. The family had its ups and downs during this 100 years' time. But in 2015, my maternal grandfather, Jassim Wazzan took his company public, Mezzan Holding Company. It is a $800 million company in sales every year. We got equity because we sold some portion of our shares in the company and we started the Jadeite Group. We are 80% focused on property development and 20% on what is called exciting ventures. We are into these exciting ventures because we are young and we want to do something more than just real estate. So, we invested in TONS e-grocery, a company that was literally doubling or tripling revenues every year since inception. So far this year, we grew 50% compared to last year. Also, we have Porter Express which is a last mile and fulfillment provider. The reason we invest in that is that it goes in line with e-grocery because e-commerce is the trend and somebody has to deliver all these shipments. We grew this company threefold in 2020. This is a big opportunity for us and we are going to expand further investing with Porter Express going forward and TONS as well this year in order to diversify into the region. We try to make things that are available in the West that are not very available in the region and bring them here. Whatever we think is applicable from the east to the west, we bring here. Simsim we established in San Diego because there is not a good shawarma place in North America. We try to play on something that we know, that we understand, that we can give value to business. Recently, during the pandemic, we also did our first private equity deal. There is a woodworking factory that we invested in here in Kuwait. The reason we invested in it is because of the huge construction projects that are expected to happen in Kuwait in the next couple of years. We are expecting 28,800 villas to be constructed in the next two to four years and we want a slice of that. The way we do things is a bit different. We do not do things in a way where we do not have a competitive advantage. We try to focus on providing an exceptional customer experience to our clients. We like to run our things in a way that is international as much as we can and we try to build internal cultures that are unmatchable here in the region. The people who work in our group advocate other people to work in our group. Within five years, I hope that we reach a point where we become one of the top 50 talent attraction companies in the region. We try to get exceptional people that are focused in STEM – science, technology, engineering, mathematics – because technology is involved in everything, in every single investment that we do. We would like to be a company that whenever you graduate from a top school in engineering or mathematics or computer science and the likes, you would think to apply to work with us.
What are your competitive advantages for TONS specifically? What do you bring to the market that is different?
In three years, I would like to be in at least two Gulf countries for the subsidiaries. In five years, we are targeting half a billion dollars in sales. I want Jadeite Group to be the Blackstone Group of the region.
The company started back in 2017 when the e-grocery space was not as accepted. I started the brainstorming back in 2014. In 2015, I did a survey with 80 people and 20% said they would buy groceries online. If I would just have gone by the survey, I would not have started the business. Back then, it was one of the few players of grocery delivery in the market. Now, things have changed during COVID. We are a marketplace where you choose your area, which supermarket serves your area, and our personal shopper delivers the goods that you ordered from the supermarket to your home. When we started there were just two or three players in the Kuwaiti market. As time passed, some other competitors came. When COVID started, we just saw a rapid rise of competitors coming left and right. A lot of companies sometimes see an opportunity and try to grab it and they do not really understand what goes behind the business. They think it is just a quick buck. But grocery delivery is not a quick buck. It is not a high margin business. It is a very operationally intensive business. Profitability is very, very narrow in this industry in general. So, a lot of people who jumped in after COVID are going to go away and then, the people who offer the best service, the best variety, and the fastest delivery to clients will remain. This is what we tried to focus on. We try to offer the best service to our clients and hopefully, offering the biggest variety. Today, we have around 60,000 SKUs (stock-keeping units) offered to our clients. We are optimizing our delivery network so that we can offer faster delivery to our clients. We have been relatively successful here in Kuwait. We have been growing rapidly, doubling and tripling every year since going to launch in 2017. We are studying heavily now the possibility of opening in Saudi Arabia. One of our advantages is the ease of use. Our UI UX (User Interface / User Experience) is one of the best in Kuwait. Everything we do we do with good design, good branding, good communication, and good function as well. This is our competitive edge. We try to do everything right to deliver the best experience for our customers. Yes, we are the grocery provider, but we do things differently and we try to maintain that.
For Porter Express, what do you bring to the market that is different? What is your competitive edge?
What we bring that is different is quality of service and our technology. Our system is more advanced than other systems available in the market and we offer our capability and quality of service. According to our customers, we are ranked as one of the few reliable players here in Kuwait. The market is very fragmented. There are a lot of small players that come and go. They do not have drivers that represent the companies that we deal with. But we work with FedEx, DHL, UPS, etc. All the major players in the region outsource their last mile delivery to us. We deliver what we say we are going to deliver at a reasonable price with a quality that represents their image. It is as simple as that. We are investing heavily in technology now. We are working on APIs (Application Programming Interfaces) that will connect their e-commerce platforms directly to our logistics systems and we can get their shipments immediately delivered to our system so that we can fulfill the order as fast as possible. We have grown in scale significantly during COVID. In terms of shipments per day, we are the number three player in the market. Other larger competitors can have all the money in the world, but if you do not know how to manage and deliver to the clients' expectations, they will leave you. We just offer the best quality that we can and we deliver on our promise.
Are you looking for investors or partnerships, technological or otherwise?
We like to have partners that are strategic in general in any of our businesses. We want partners that share our ethical profile, because we as a family try to work on a certain ethical standard that we do not compromise whatsoever. We are actually in discussions with a major retailer here in Kuwait to get into a partnership with them. We want a partner to scale, hopefully to get into the Saudi market, because we see a huge potential there. We are looking for partners that are strategic because we do not want to make it a local game anymore. For the first five years of our business, we have been primarily investing in Kuwait and we are starting to realize that this market is too small. If you want to grow, you have to go nearby. Our next step is to go to the GCC market. The market is getting competitive. However, this is just the beginning of e-commerce. In 20 years' time, you will see a significant portion of the grocery market going online. Today, we have not passed even 10% in the region. So, for an $80 billion market, if 10% is e-grocery today, that is one billion. I expect within 10 years, we will get into the 20-30% range.
What are some of your success stories?
With Porter Express, acquiring the business was our biggest success story today. When we acquired the business, it was a failing business. With a very minimal investment, we were able to make a 2,000% return on investment in two years. Our target is to reach yearly 20 times in profits for the next two years and as we speak, we are doing another funding to scale Porter Express. We are in the process of acquiring a warehouse and we are going to do a fulfillment center, the first in Kuwait.
Will this growth be through acquisitions or will it be with a local partner?
We are not going to do acquisitions, obviously because if there is a meaningful player then they are going to be significantly bigger than us. We would like to get a Saudi partner on board that shares our values, that shares our vision, that shares our ethical standards, and he will help us with the knowhow and navigating doing business in Saudi Arabia. We will do what we do best which is logistics and delivery of e-grocery. It is better to be partnering with somebody who knows the market rather than us on our own who have never been exposed to the Saudi market. The market is much bigger if you do it right. So, that is our next step in our strategy to focus and expand our businesses in nearby countries, primarily Saudi Arabia and we might open offices in Dubai as well.
What CSR activities are you active in?
For example, our bags are recyclable. When you walk around Kuwait City you will see people carrying TONS bags because the bag is recyclable and it can be used elsewhere. During the pandemic, we helped to pay the tuition of students whose parents are facing financial difficulties. We believe in education and we believe in giving people the opportunity to educate themselves. We cannot stand the child not being able to complete his education because of the lack of money. But we do not make a fuss out of it. We do not publish it. It is just something that we do for ourselves.
What will the group be in three years’ time? What is your ambition and what do you want to achieve?
In three years, I would like to be in at least two Gulf countries for the subsidiaries. In five years, we are targeting half a billion dollars in sales. I want Jadeite Group to be the Blackstone Group of the region. We started as a real estate business and a small portion of our businesses is exciting ventures. After a couple of years in business, we realized that that 20% is generating significantly more than the 80% in real estate. We saw that we are good at taking small companies or emerging companies and growing them. So, we would like to shift the Jadeite Group strategy to more of a private equity strategy that will cover businesses and real estate at the same time. We want to be known for one of the best cultures in the Gulf region, a culture that inspires entrepreneurial drive, a culture that extracts the human potential, a culture that attracts the best talent in the region. This will be applied to the Jadeite Group as an investment and private equity player in the near term and on our subsidiaries each by itself, each in its own way, in its own indices. After a couple of years of business, I started to realize that it is not the strategy that makes you win, it is not the product only that makes you win, it is the people that make you and if you get the right team and the right people and build the right environment for them to thrive, it can achieve a lot. This is not something that I see significantly here in Kuwait. We are working on this culture. We are still young. We are still working as a company, but one day we are going to be one of the talent attraction companies here in Kuwait.
What inspires you to do what you do? What drives you?
What drives me is that I just do not want to be the person that comes to this world and leaves without having any impact. It is as simple as this. I am inspired by both of my grandfathers. Both of them came from quite humble beginnings and one of them went to become the founder of one of the main conglomerates, the top 100 companies in the Middle East, which is Mezzan Holding Company. My other grandfather was also a business magnate in the old days in Kuwait and he actually built the first concrete building. What drives us is making a legacy. We are not here just to eat, sleep, and have fun. We are here to deliver something and your life is a story about what you want to deliver. Our story is to deliver an institution that unlocks human potential in this region. I want to get people to work and do something exceptional and hopefully benefit the region at some point in time. What drives me is making an impact on this region and hopefully building an institution that will outlast us in centuries to come.
So, you have that long term vision, not just here to do one thing and then be done. You want to expand and leave a mark.
Exactly. I appreciate the companies that were started by their founders and they are still around, for example, Johnson and Johnson or Proctor and Gamble. These companies started 150 years ago and they are still thriving and still as relevant as they were back then. Few companies in the region are to that extent. I would like our company, our group, to be one of those one day: to be a company that is institutional, that is working, that has a huge community, that has a very strong Board of Directors, that has very strong corporate governance, that went on without the family and it will just run and grow by itself. It matters and it offers a service that people want, it offers a solution that businesses want, and it is a contributor.
What is the state of the sector or doing business in the region?
The West is significantly ahead of us when it comes to building organizations and unlocking ideas and making them global. We typically are the adopters of the West's initiatives. So, if somebody does something, we just copy the model and implement it here. I wish we as a region can work on our educational institutions and our educational system and build a collaboration between education and corporations to come up with something that is novel or original. I envy Silicon Valley because of the education system available there when it comes to Stanford University, UC Berkeley, and the likes and the availability of industry like Apple, Intel, Google, etc., that are collaborating and building this ecosystem that unlocks human potential and creates trillion dollar companies out of almost nothing. Unfortunately, here in the region, we do not think this way. I see the Chinese doing it right now. They are becoming significantly more innovative and becoming really a competitor to what people are doing in Silicon Valley. I wish we will have something here in this region that combines education, industry, and people and intellect and creates something that will benefit the world.
For more information, please visit: www.jadeitegroup.com.
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