A new brand campaign has been rolled out, mobile now accounts for 60 per cent of sales, and $275 million has been deposited in the company’s bank account. Iain Akerman caught up with Souq.com’s co-founder Ronaldo Mouchawar to find out why things are going so right for the Dubai-based e-commerce giant
“If you look at the message, it’s about youth, it’s about empowerment,” says Ronaldo Mouchawar, chief executive and co-founder of Souq.com. “It’s about connecting the Arab world, of being able to make choices. It’s a signal to Arab youth that the rest of the world should not write our region off.”
Mouchawar is talking 19 to the dozen as he discusses the company’s new advertising campaign. He appears happy, and not without good reason. Directed by Ali Ali and Good People, ‘It’s Yours’ currently sits atop YouTube’s leaderboard of the region’s most watched commercials. Not bad for a company that has traditionally focussed on tactical advertising.
But then again these are different days for Souq. It is the largest online retail and marketplace platform in the Arab world, recently secured $275 million from investors to support future growth, and attracts over 45 million visits per month. As such, the brand name and its image are increasingly important.
The company rolled out a re-brand earlier this year, with a new logo and a splash of more vibrant colours, while further features were added to the website and mobile app to increase the ease of shopping on the go. In essence, there is now more power in customers’ hands, hence the tagline ‘It’s Yours’.
“When Souq initially launched we were focussed on educating people about how e-commerce works,” says Mouchawar. “It was very tactical, in terms of cash on delivery, fast return, quick delivery, all the things you want to tell people to convince them to adopt online. But now with the growth of mobile the platform is more about being inspirational. The message is a lot more emotional and we felt that as the platform was changing – as we re-branded – being young was an empowering message and mobile was at the heart of everything.
“It’s about building the brand, but there is also a feeling that with Souq, no matter who you are – an employee, a merchant, a buyer, even an entrepreneur around us in the region – Souq can play a role in developing your inspiration. And our main mission, because we’re a marketplace, is about connecting products to people. And now mobile is at the centre of that.”
Mobile is at the heart of everything Mouchawar says, and it’s easy to see why. Mobile has been a huge driver of growth over the past two years, both for Souq and for the Middle East’s online market as a whole, while Kuwait, Saudi Arabia and the United Arab Emirates are amongst the top seven countries worldwide for mobile phone penetration. As such, m-commerce now accounts for over 60 per cent of Souq’s sales and will be central to its activities going forward.
So will, as you would expect for an online retailer, digital and social media. The ‘It’s Yours’ campaign is almost entirely digital in nature and a glance at Souq.com’s statistics will tell you why. It has 368 million monthly page views, an average of 45 million monthly visits, and 19 million unique visitors every month. With 7.7 million followers on Facebook, 332,700 on Twitter and 168,500 on Instagram, Souq knows on which side its bread is buttered.
“There are certain things you can only do through digital,” says Mouchawar. “We felt that the consumption of the video would happen on mobile because of the high smartphone penetration, particularly in Saudi Arabia and the UAE. We wanted the message to be cool (given the region’s youthful population) as well as focussed on delivery through digital, not traditional TVCs. There are many versions of the ad – some are focussed on fashion, some are focussed on music etc – and you’re able to do that digitally versus traditionally in a 30-second ad.”
Originally from Aleppo in Syria, Mouchawar co-founded Souq with Samih Toukan and Hussam Khoury in 2005. It began as an online auction site linked to the Arab internet portal Maktoob, but was spun off as part of the Jabbar Internet Group when Yahoo! acquired Maktoob in 2009. The site then switched to a marketplace with a fixed price model in early 2011 and launched its retail division later that year.
Headquartered in Dubai, it serves customers in Saudi Arabia, the UAE and Egypt and last year began delivering to customers in Oman, Qatar and Bahrain. Further expansion is expected following the injection of $275 million.
That figure represents the largest-ever fundraising in the region’s e-commerce space, with Tiger Global Management, Naspers, Standard Chartered Private Equity, International Finance Corporation and Baillie Gifford all participating in the funding round. Both Naspers and Tiger Global Management had invested in previous funding rounds, while Standard Chartered Private Equity later announced that it had invested $50 million in Souq.com for a minority stake. It did not specify the stake size and nor does Mouchawar discuss the company’s shareholder base. Now all Souq has to do is put that money to good use.
“We’ve been expanding very fast,” admits Mouchawar. “Our marketplace has been growing quite substantially and there are now over 1.5 million products on the platform. So to support the growth we need to make sure we have a robust customer service team to help us provide the best customer experience. E-commerce has a lot of physical delivery and logistics and payment codes so we want to invest in building our marketplace platform; to make sure that our mobile app and mobile technologies are the best in class worldwide; and that as we grow we have the right network and infrastructure.”
And yet e-commerce in the region still only accounts for a small percentage of retail expenditure compared with the rest of the world. There are other problems too, namely those related to payment, consumer confidence and the persistence of ‘cash on delivery’ in certain areas.
“Initially the problems were associated with payment and the cost of logistics etc, but we’re taking good strides now in terms of solving some of the issues. The key now is to build the right scalable tools for the merchants so they sell more and faster.
“But Souq still has a long way to go. As you say, e-commerce is still only 1 or 2 per cent of retail in the region. In the West it’s more like 7 to 10 per cent and we have to grow the market; people have to become more comfortable shopping online, and merchants and brands have to put more focus on marketing through platforms such as Souq and using digital ways to market the product versus the traditional activation and advertising model that we’ve seen in the past.
“But global brands have seen how e-commerce changes retail behaviour in the West and in the UK, for example, where you see e-commerce at 12 to 17 per cent in some categories. Brands are aware that this is the future.”
Is Souq doing enough to develop ad solutions? Is it even attracting the attention of media agencies?
“We’re getting more attention,” replies Mouchawar. “The last few years have been quite a step change for us because of our reach. Initially we were focussed on supporting brands working with us in trade and e-commerce. Now you can see with the data that we have about our buyers, the type of behaviour, what products they’re looking at, all could help with complementary targeting and advertising. E-commerce gives you transactional buyers who are quite tech savvy, and targeting can be done by age, by buying behaviour, by brand, and by purchasing power.”
Mouchawar, who started his career as a technical and systems consultant in the United States and holds a master’s degree in digital communications, is in many ways an example of what entrepreneurs and digital start-ups can achieve in the Middle East.
“It takes a lot of understanding of local behaviour, but a lot of it is – to be honest – about perseverance,” he says in response to questions about succeeding as an entrepreneur in the digital space. “Thinking technology first. And when times are good or times are difficult as an entrepreneur, you need to be focussed. You have a mission. A lot of people will tell you ‘this might not work’, ‘this is not the right model’, but you need to focus. Continue to evolve what you offer to your customers and, with some determination, a bit of luck, a bit of brand passion, a bit of consumer passion (you have to love your users and understand them), I think entrepreneurs in this part of the world – with mobile being so highly penetrated now and everyone connected – will find a lot of good local opportunities.”
Has it been stressful along the way?
“The passion sometimes overcomes the stress so you don’t know whether you’re too passionate or too stressed,” he replies with a laugh. “But if I close my eyes and look back, I don’t think I would want to do any other job to be honest. I feel very blessed.”
