Rocket Internet's Wadi.com raises $67M in record Series A funding in the Middle East
Middle East-based e-commerce platform Wadi.com, operated by Dubai-based Wadi International General Trading LLP, has raised $67 million (around Rs 458.4 crore) in Series A round of funding led by the Al Tayyar Travel Group, with existing investor the Middle East Internet Group (MEIG) also co-investing.
The funds will be used to scale up the firm's business in the Middle East and build last-mile connectivity and logistics in the target geography, said co-founder and managing director of Wadi.com, Ankit Wadhwa.
"Wadi.com has a strong proven capability to adapt to the market and build a huge portfolio of products. We are confident about seeing the company growing further, especially with the cargo and logistics support our group will be offering," said Abdullah Bin Nasser Al Dawood, managing director and CEO of the Al TayyarTravel Group.
According to Wadhwa, the Middle East region was where India was roughly in 2010 in terms of e-commerce evolution. If India's e-commerce revenue is projected to grow to $100 billion by 2020, the Middle East's e-commerce revenue is expected to grow to $40 billion or 40 per cent of that of India.
Besides this, other classic indicators of e-commerce growth are high smartphone and internet penetration in the region, which stands at ~80 per cent and ~78 per cent, respectively. "We also see in our current set-up that a large share of our mobile base comes from iOS versus Android in India," Wadhwa added.
Furthermore, the region offers an easy route to achieve profitability because fewer people are paying more. "Each individual order is much larger and that consequently has an impact on profitability metrics," he said. However, despite the high profitability, Wadi.com also has to ensure a high level of customer service. Additionally, the Middle East market is not a discounting market, explained Wadhwa.
Besides Wadi.com, other major ecommerce players in the region are e-commerce portal Souq, which is Naspers-funded and Namshi, which is part of Global Fashion Group, the company that operates e-commerce portal Jabong.
Wadi.com set up its Dubai and Gurgaon offices simultaneously because it wanted to tap into the Indian talent; hence, most of the 60-odd employees have prior experience in established Indian retailers such as Snapdeal, Myntra, Paytm and others.
The firm's India office forms the core of its operations as its technology, marketing and business intelligence units work out of Gurgaon. Logistics and sourcing are done locally.
"We are expanding our sourcing in India as India has a much more evolved seller base. We have on boarded about 50 sellers in India. We are almost done on streamlining our supply lining from India to the Middle East," said Wadhwa.
Wadi.com is a horizontal marketplace and has products in 25-plus categories with electronics, fashion, beauty, home and kitchen being the largest ones.
Going ahead, the firm is going to focus on achieving profitability, "We are keen on keeping our team lean and maintaining lean but efficient operations. To do this, we will be scaling up some elements of our logistics in local geographies in Saudi Arabia and the UAE," explained Wadhwa. Logistics is also an area the firm is looking to invest in as it is not very well-managed.
Wadi.com was started in 2015 by the Middle East Internet Group (MEIG), a joint venture between German internet platform Rocket Internet and South African telecommunications provider MTN. The e-commerce firm is currently active in the United Arab Emirates (UAE) and Saudi Arabia and is expanding soon to more countries.
The firm's founding team are Pratik Gupta, formerly of Jabong's founding team, Ankit Wadha, an ex-McKinsey consultant who served clients in the Middle East and Kanwal Sarfraz, also a former McKinsey consultant with stints at Unilever and Gallup in Pakistan.
MTN Group's JV with Rocket Internet was established in 2013 to extend online retail and other essential digital services in the Middle East region. Both companies own equal stake in MEIH .
Rocket Internet's core model is to replicate successful global internet businesses in emerging markets outside China with rigorous marketing. It brings in industry executives, gives them stakes in the companies and designates them as co-founder/founder/CEO. Most of its portfolio companies have multi-geography operations.
Asia Pacific Internet Group (APACIG), a joint-venture between Rocket Internet and Qatar-based telco Ooredoo plans to launch one new internet venture in Asia Pacific every quarter. The firm began its aggressive bet in Asia in 2015 with the Australia launch of online beauty marketplace Vaniday.
APACIG started building India exposure with $4.5 million investment in printing solutions startup incubated by Rocket Internet, PrintVenue.
In January 2016, Rocket Internet raised $420 million in the first close of its new fund â€“ Rocket Internet Capital Partners â€“ with Rocket Internet itself is contributing about $ 50 million, to invest in European internet companies.
The Al Tayyar Travel Group Holding Company is a Saudi joint-stock company and has invested in operations across tourist destinations such as Saudi Arabia, nations in the Gulf Cooperation Council (GCC), Egypt, Sudan, Lebanon, Malaysia, the United Kingdom and Canada.