It’s no secret that the past few years have been difficult for SMEs across the UAE. However, we’ve also heard many success stories on the SME front – particularly for apps. For example, InstaShop’s rise, Amazon’s purchase of Souq.com, Emaar launching Noon, Namshi.com’s growth in the fashion space.
After heading the global intelligence unit of Philips Consumer Lifestyle and setting up the lighting brand’s marketing intelligence division for the Middle East and Turkey, John Tsioris founded InstaShop in 2015. The past four years have seen a significant growth in user base for the app, which started as an on-demand grocery ordering platform and has since expanded into pharmacy, pet shop, butcher, organic and maids’ services.
In less than four years, InstaShop has expanded from the UAE to Qatar, Egypt, Lebanon and Bahrain. From 2016 to 2018, the app was nominated one of the region’s most promising start-ups to watch by Forbes Middle East. With a fast-growing monthly active user base of more than 350,000 people and over 150 employees, InstaShop aims to fulfil customer orders in under an hour. The platform lists several well-established supermarket names, including Union Co-op, Choithrams, Al Maya, Zoom, Aswaaq and Bluemart.
The platform’s CEO, who holds master’s degrees in mechanical engineering and general management, discusses the state of local e-commerce, InstaShop’s entry strategy for new verticals and the lessons he took from corporate life when launching a start-up.
What is it about e-commerce brands here that has helped them avoid some of the pitfalls affecting traditional businesses in the UAE?
Indeed, the UAE’s e-commerce sector has been booming. Its success is primarily driven by a combination of two factors. The first is strong demand for the services by a youthful population in tune with the latest mobile applications who are always on the lookout for apps that save time and offer convenience. The second driver is a supply of good-quality services by strong local entrepreneurs – the UAE really is a market that has an app for everything.
Conversely, when talking about traditional SMEs or even large corporations, there is often a mindset problem. My observation is that such companies have not only been missing out on the latest technological transformation happening but have often also been resistant and in denial of the changes that are taking place. In the case of InstaShop, I recall several cases of smaller and larger supermarket chains, pharmacy chains and so on that initially completely dismissed InstaShop as not really a thing, ignored the change for several years, only to inevitably realize that they needed to come on board to stay relevant.
Having said that, despite e-commerce companies looking so shiny on the outside, the reality from within is tough. They require resilience and are characterised by an extreme pace of innovation in order to stay afloat, tremendous complexity and a large amount of interdependencies that need to be balanced to keep the service running; most of the things we do are often done for the first time even at a global level. This is a reason why, while many think they can succeed in the e-commerce realm, very few actually do.
As an InstaShop user, I’m aware of the benefits of the app for end users. How do you incentivise supermarkets to get on the platform? Can you give us a little more information about the InstaShop business model?
InstaShop, in many ways, is an extension of our partner shops; as such, our easy user interface and execution quality is why we are the place for retailers to be when it comes to on-demand grocery shopping in the Middle East. What InstaShop represents is a highly customised platform that enables brick-and-mortar shops to come online without going through the capital-intensive process of developing and marketing a platform of their own. We are basically the friend and advisor of physical retailers across the journey of transitioning online. Beyond sharing our know-how, InstaShop also generates a strong incremental revenue stream for our network of partners and that is obviously a strong incentive to come on board.
In regards to the business model, it’s rather simple: InstaShop receives a revenue component from the shop as a percentage of the order value and a service fee per order from the user.
In recent years, you’ve added categories such as pharmacies, pet shops, butchery, organic and even maids’ services – what might we see added in the future? Would these services be integrated into the existing app, or are you looking to launch new ones?
We are very excited with the launch of the pharmacy, butchery and pet care delivery services this year and we are working on expanding in other verticals as well. We’re already piloting flower delivery in certain areas of Dubai, as well as specialised fresh produce delivery.
The addition of these new services have been in pilot mode since June 2019, seeing a significant growth of 60 per cent a month on orders placed. From our journey so far we have understood that when it comes to the digital shopping, the demand for convenience is the highest it’s ever been to date. By bringing groceries, medicines, pet care and butchery all under one roof, we are filling a huge gap in the market, while providing customers with a one-stop shop for their daily needs. There is a unique beauty that, in just a few taps, you can have all these different products delivered to your home in about an hour.
Prior to launching InstaShop, you worked at Philips for a number of years. What are some lessons you took away from the experience of corporate life that served you well when launching your own business? For people in a similar position – and there are a lot of them here – how do you know when the time is right to take the leap? What were some questions you had to ask yourself when you were making the decision to leave Philips and start InstaShop?
When it comes to entrepreneurship, each person forms their own journey. I hadn’t started pursuing my entrepreneurial dreams until I was 28 years old. I am grateful of the years spent working for my prior multinational employer as I learnt so many things I can put to work today. For example, from a company of that size and maturity, you understand how important processes are and, on the downside, how too many processes can hinder the speed of execution and transformation.
If I had to give one piece of advice on when to start your own ventures, I would say start today. Don’t wait because it’s never too early, forget about the fear of failing and don’t settle for the current comfortable and secure phase you might be in. There is no better experience than the one gained trying to make your start-up fly, learning how an industry works and building the best team.
The Now mentality is how InstaShop came to life, as it was first introduced as a minimum viable product.
To this I have to add that starting, while important, is just that – a start. Hell breaks loose right after and lasts for several years with minor breaks in between. Relentlessly fighting during that tough period leads you much closer to success. Steve Jobs sums it up in a great way: “Half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance”.
There are no quick fixes and instant growth hacks; there is passion, determination and lessons – so many lessons!