e-Commerce industry has had lot of mixed messages for the region over the last few years. Many players entered the market while a few took the exit door. This is the second post of a three part interview series with some upcoming and established e-Commerce players in the region.
Omar Kassim is the founder of JadoPado.com. The business is currently funded and owned by his family. He is he CEO of Al bogari Holdings, a trading and investment firm. JadoPado, when pronounced slightly differently to the way we say it, is the equivalent of calling someone a “fatty” in some North Indian dialects. Tfour.me caught up with Omar to ask a few questions.
What motivated you to start Jado Pado?
In 2010 we were looking to invest in new ventures. I thought why hasn’t any one done an Amazon like experience in UAE that could be scaled up across the region? We felt there was a market evolving enough to allow e-Commerce to take place at an essential scale.
Most outstanding factor of Jado Pado that distinguishes you from the competition?
It is the delivery of products that distinguishes us from others. We usually hold inventories and deliver within 3-6 hours after the order has been placed on our website. We are pretty strong on the UI front as well; however I leave on the users to judge that.
How important is mobile commerce for you?
It is up and coming but the market is not evolved yet where you need dedicated apps. Mobile channel is interesting and you need to watch out as many people increasingly access Internet via their mobile devices. Building an app and not getting it right for the first time may drive away your potential buyers. It’s just matter of building seamless UI experience like Apple has done to make the users comfortable to perform financial transactions.
What's the average margin you expect to get as an e-Commerce retailer?
It depends on the type of business you are in. If you are a fashion retailer you can expect to make 30%-40% margin. As an electronics retailer I would realistically say you can make up to 5% margin and I would like build my margin up to 8%-10% by cross-selling. If I can get into the lower double digits I would be quite happy. If I remember, Amazon trades at 8% net margin, considering the size of their business that is a decent benchmark to go by.
How have factors such as SEO, user experience, site design, those less visible but very important aspects of having web presence, been contributors to your success in addition to more publicly visible things such as stories and social media?
In my opinion as a business we are not focused on SEO at all. It is necessary at some point of time, but I feel people try to optimize some things that are going to change any way. Yes, you want that free traffic but at the same time you can get that traffic by building your business. You can build business by delivering the right customer experience and that will help you attract traffic. Social Media is important, but again it depends on how you interact with your customer online.
We have tried doing outdoor advertising and it may seem pretty strange but it works for us. Customers treat your brand in a different way when they spot it online and offline. When you are out there advertising continuously outdoor, customers tend to recognize your brand and don’t consider it just a website.
Any plans to start a retail store?
No! Not immediately. In fact our present model allows us to offset certain costs, so a retail store doesn't make sense.
Biggest challenge in the region for your e-commerce start up?
Payments! Paypal has entered the region which will make things easy. Some payment issues have been resolved over a period of time. I can understand why payment gateways set up costs are very high as the volumes are not that high to justify the cost and there are frauds taking place. We ended up building lot of systems internally to combat fraud. The payment gateway companies have very thin margin and that’s why they are selective in doing business with clients.
What do you think will happen to the e-Commerce industry in 5 years in the region?
I can see 15-20% of the retail business going online. For some sectors it may be overly optimistic prediction and for some very conservative. Travel sector is anyways ahead in this area as most of us buy tickets and book hotels online.
Your biggest competitor?
We compete with both online and offline retailers in different ways. We may be competing with offline retailers for eyeballs as they have got more traffic coming in and high brand awareness. We may be competing with online retailers like Souq.com on pricing. There are many other smaller startups coming up with better price structuring that are potential competitors.