Delivering digital disruption

Lara Brunt | United Arab Emirates | 10.12.2017

If you’ve been shopping online recently in the Middle East, chances are a Fetchr courier, clad in a bright orange T-shirt and baseball cap, has delivered your package to a location specified by your smartphone. The innovative courier firm is shaking up parcel delivery across the region by using your smartphone’s GPS location rather than a physical address like a standard courier.

 

Based in Dubai, the start-up was co-founded by expats Joy Ajlouny, who was raised in the United States by Palestinian parents, and Iraqi-Frenchman Idriss Al-Rifai. ‘At its core, Fetchr is a tech company. And our whole core is to enable all deliveries through technology’, says Joy.

 

Parcel delivery—traditionally dominated in the Middle East by DHL, UPS, and home-grown firm Aramex—is big business. The global market was worth almost US$300 billion in 2016, up from just over US$270 billion in 2015, according to the latest report by consultancy firm Apex Insight. E-commerce is driving this growth, with global online sales in excess of US$1.6 trillion in 2015, up 25% from the previous year.

 

In regions like MENA, however, the lack of postal addresses is a major barrier to e-commerce. While Aramex has launched its own app that allows users to share their exact location, Fetchr hopes its proprietary tech system can help drive the development of online retail in the region.

 

‘Dubai is traditionally a shopping destination, and people come from all over the world to shop here’, says Joy. ‘We’ve got the best malls in the world, but recently more people are shopping online. E-commerce is booming in the region, but it is just starting. A lot of the local players are not online, but the international players are definitely spending digital marketing dollars here’.

 

According to a 2016 Digital Middle East report by McKinsey & Company, the Middle East is on the verge of a massive digital disruption, with significant untapped e-commerce potential. E-commerce penetration in the region is estimated at a mere 2% of retail sales, while it is 15% in mature markets like the United Kingdom.

 

The region has welcomed a slew of new e-commerce ventures, including TheModist.com, Ounass.com, and Noon.com, while Amazon recently completed its estimated US$650 million acquisition of Souq.com. ‘If Amazon is interested in this region, it’s for a reason—e-commerce is booming’, says Joy.

 

The growth in online shopping presents a phenomenal opportunity for firms like Fetchr. ‘People talk about the growth of e-commerce, but it’s all about shipping’, says Joy. ‘In emerging markets, everything is cash on delivery. For companies like Souq.com, the transaction doesn’t take place at the laptop; it takes place when the shipping company picks up the cash at the door. It’s a really important partnership because the e-commerce firms are relying heavily on the shipping company’.

 

Joy understands this better than most. Prior to Fetchr, she founded Bonfaire, an e-commerce platform that allows customers to pre-order next season’s luxury shoes, handbags, and accessories. As orders flooded in from customers in the Middle East, she was shocked at the high return rate of packages due to incomplete or vague addresses.

 

In 2013, Bonfaire was acquired by e-commerce giant Moda Operandi, owned by LVMH and Condé Nast. Looking for new opportunities, Joy met Idriss at a tech conference in San Francisco’s Silicon Valley. With a shared background in e-commerce, the pair bonded over the problems caused by the lack of physical addresses in emerging markets, and Fetchr was born.

 

 

The firm has since raised US$52 million in investment and is the first start-up in the Middle East to be funded by a top Silicon Valley venture capital firm. Currently operating in the UAE, Saudi Arabia, Jordan, Oman, and Egypt, Fetchr has ambitious expansion plans. ‘We’re looking to Pakistan, the rest of the Gulf countries, and Africa. We’re really focusing on the 2.5 billion people that have no physical addresses’, says Joy. Many streets in the region do not have names, and there are no postcodes, which has been challenging to mail delivery companies as most couriers won’t deliver to a PO box.

 

While the shift to online shopping has taken its toll on traditional brick-and-mortar retailers in the US and Europe, Majid Al Futtaim, which operates 21 malls in the region, including Dubai’s Mall of the Emirates, was a key investor in Fetchr’s latest funding round.

 

The courier firm has partnered with the mall operator to offer a hands-free shopping service at the Mall of the Emirates, where shoppers can have their purchases delivered to their home or hotel, and also does the shipping for Majid Al Futtaim stores.

 

Meanwhile, online retailers are offering ever-faster delivery, such as same-day or within hours of ordering. As this becomes more mainstream, Apex Insight believes it will drive growth and potentially give retailers a competitive advantage if they can deliver a superior service. ‘That’s the name of the game and that is 100% logistics’, says Joy. Fetchr has responded by launching Fetchr Now, which picks up your package in under 45 minutes and delivers immediately, alongside its standard same-day or next-day delivery service.

 

Fetchr is not the only tech start-up intent on disrupting the delivery market. In May, local ride-hailing service Careem launched Box, a same-day delivery service that allows customers to track the delivery of small items via the app.

 

However, Fetchr believes that its largely business-to-consumer (B2C) business model—working with around 700 e-commerce clients across the GCC—is very different from that of Careem. ‘We’re aware of what’s going on, but we just focus on what we do, and we try to do it better than anyone else. Because at the end of the day the customer decides—if you have a better experience, you are going to come back’, says Joy.

 

Like Amazon, Fetchr is also looking to drone technology. Last month, Fetchr announced a partnership with California-based Skycart and the UAE’s Eniverse to develop the first autonomous drone delivery service in the region. Skycart already offers a similar service to its users in the US, delivering packages to its customers’ doorsteps in 30 minutes or less using their UAV (unmanned aerial vehicle) network. ‘Whether it works or not, we don’t know. But we’ll definitely be the first to do it [in the Middle East]’, says Joy.

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