Ultrafast Delivery Model Creates New Opportunities for On-Demand Services in MENA

The pandemic has played a key role in driving the rapid rise of quick commerce — also referred to as on-demand delivery — in recent years, as consumers’ appetite for faster delivery options have given a huge boost to companies in the ultrafast grocery delivery market.

Earlier this month, PYMNTS reported that Turkish 10-minute grocery delivery company Getir had raised $768 million in its Series E funding round at a valuation of $11.8 billion, an indication of the sector’s significant growth potential.

Read more: Getir Valuation Rises to $11.8B

But in developing markets in the Middle East and North Africa (MENA), the instant delivery model — particularly same-day delivery options for items other than food products — is still new.

“This is a new concept. It is there in Southeast Asia and Latin America, but it wasn’t yet reflected in Africa and MENA. That’s why it’s a very exciting market [for us and investors alike],” Yasmine Abdel Karim, who co-founded on-demand logistics and delivery startup Yalla Fel Sekka (YFS) with Khashayar Mahdavi, told PYMNTS in a recent interview.

The Egypt-based business-to-business-to-consumer (B2B2C) startup enables businesses such as eCommerce firms, supermarkets and pharmacies to sell to their customers by leveraging its network of mini-warehouses and dark stores that are located close to customers in densely populated cities.

“Take a city like Cairo with a population of over 20 million people” Mahdavi said. “[If you want] to deliver [goods] in 10-15 minutes or half an hour, you have to have a distributed network of warehouses within these large agglomerations that are very close to your customers [to enable you to] store and deliver these goods within [that timeframe].”

Since launching in early 2020, their business model has caught on with businesses, and today, the MENA-focused delivery company has completed over two million deliveries via its network of 1,000 active motorcycle and van drivers. YFS currently operates in five cities in Egypt: Cairo, Giza, Alexandria, Mansoura and Tanta.

In-House Brand Not a Priority

When asked whether the firm would consider a private label or in-house brand in a bid to boost profitability and increase loyalty — as is common in the ultrafast delivery market — Abdel Karim said they were more focused on providing more efficient on-demand logistics services and disrupting the market from the back end.

“It’s nice to have your own brand [and] I understand why the businesses are going for it,” Abdel Karim said, “[but if] you are searching for milk, you have a certain brand that you’re used to,” and it would be a challenge to convince consumers to switch to a lesser-known brand.

It would also require using strategies like promotions and rewards to get consumers on board — a strategy that Abdel Karim said was likely not worth the capital and acquisition cost needed to launch a private label.

Mahdavi also acknowledged the benefits of an in-house brand but reiterated YFS’ focus on building a logistics platform with efficient warehouse and dark store management at reasonable prices for their clients.

“I would say having your own in-house brand is important, but there are so many other things that you have to ensure to make sure your customer is satisfied and is a recurring customer that is going to come back because they liked your product and service,” Mahdavi added.

SMEs Help Business Growth

At the launch of YFS, the founders mainly targeted larger companies like major supermarket chains, instead of small- to medium-sized enterprises (SMEs), because those businesses could provide the large and daily recurring volumes the company needed to operate.

“Our strategy was to go for these big accounts because it allowed us to build up our fleet very quickly, and once you have the fleet, that means you have coverage, and when you have coverage, that means you can offer the SMEs that have a different pattern of deliveries a cost-competitive [service],” explained Mahdavi.

But with more than three million SMEs in Egypt today, he said that the SME segment has become an important aspect of their development strategy.

Moving forward, the Cairo-based company plans to increase its dark stores to at least 20 by the end of this year and further expand across Egypt and other markets in the MENA region, leveraging a $7 million Series A capital injection it recently secured from investors.

For Mahdavi, the beauty of the YFS model is that the more the company grows and the bigger the fleet becomes, serving customers in cities like Cairo will become much more cost effective in terms of unit economics, enabling them to deliver more to their retail customers.

“With YFS, we have a constant eye on productivity and on unit economics, and we are really using technology and our management skills to improve this dramatically,” he pointed out, adding that “we will be able to deliver to end users, customers and SMEs at a really fantastic and affordable price.”

Given how complex and fragmented Egypt is to operate in, Abdel Karim said being able to win on their home turf will make it easier for them to operate in any other market.

“It’s a very interesting but also a complicated market to work in, so if you manage to succeed here, [you can succeed anywhere],” Abdel Karim said.

Sign up here for daily updates on all of PYMNTS’ Europe, Middle East and Africa (EMEA) coverage.