Dubai: The local brick-and-mortar economy might be looking quite subdued, but none of that seems to be reflected in the eCommerce space. New Web-based businesses are making it to the launch phase with regularity, with recent weeks seeing multiple ones in the classified and property listings space.
There haven’t been that many new portals selling tech gadgets and smartphones, with this category consolidating around a handful of big names who have been able to fend off the intense competition. Portals offering fashion and value-for-money apparel continue to hold their own, some of them faring much better — in growth terms — than their counterparts in the physical retail space.
All of which could be why venture funds are flowing into the eCommerce space, seeking to get in while the industry is still growing in strong double-digit terms. And there are those who have recouped their investments — and then some — from exposures they had made in the past.
The Cosmos Group recently made an exit from Nailthedeal, a daily deals portal, and claiming a 300 per cent gain on the initial investment. “The first round was seeded at $250,000 (Dh918,287),” said Gaurav Aidasani, CEO of Cosmos. “There was another Serie A round in 2013.
“Cosmos was one of the investors in Nailthedeal at inception. The venture was backed by a group of angel [investors]. Cosmos Group then bought out the other original investors in early 2012 within the first year of the operations.”
But isn’t it the case that daily deals volumes generated by portals have scaled down quite a bit from what they were in 2012-14, when they were all the rage?
“Quite the contrary, the number of deals and vendors increased substantially with Nailthedeal signing its 5,000th vendor early this year,” said Aidasani. “We increased our database almost organically year-on-year … [and] last year had a 19 per cent increase in the database with little to no marketing spend.”
But Aidasani acknowledges that the daily deals category had become overcrowded “quite quickly”. “There was a lot of outside investment which raised valuations and marketing spend went through the roof. The smaller websites closed down whereas there was a lot of mergers and acquisitions within the Top 2.
“Essentially, everyone reduced their costs and pushed towards profitability which is why the current sustaining websites are doing well.”
Based on estimates by the payments services company MasterCard, the UAE’s eCommerce space could reach $10 billion from the current $2.5 billion. The same survey found that 50 per cent of respondents have already used the web to shop for goods or services.
Or even buy premium food preparations and bakery products, as the case may be. This is what Vasso Kousathana, founder and Managing Director of Award Deli, is tapping into.
“The convenience of online retail is a major factor in a city like Dubai,” said Kousathana. “By eliminating physical trips to stores, it saves consumers time which they can dedicate to more important things.
“We wanted to offer consumers a service that allowed them to shop for their favourite gourmet food without having to get in the car [and] without compromising on quality, [which is] a huge concern for online shoppers.”
Award Deli’s launch was self-funded by the promoter. The forecast is to turn a profit in the second or third year of operations, which is “a standard in this business”.
“The initial response has been more than promising and I can safely say that we are likely to reach this milestone sooner rather than later,” said Kousathana.
“It used to be tough to find top-shelf products and expectations were not always met, not to mention the fact that they were overpriced. I identified this gap in the market and our fair pricing has ensured our customer base continues to widen. In a city with a growing population, we are certain our first-mover advantage will continue to stand us in good stead.
“Creating a unique product is what is going to make us profitable.”
