e-Commerce industry has had a lot of mixed messages for the region over the last few years. Many players entered the market while a few took the exit door. We have been running a series of interviews with existing e-Commerce players in the region asking them how do they manage their business and what challenges do they face. This interview is part of a series called e-Commerce Entrepreneurs in the Middle East.
This week we interviewed Shailesh Sawlani, COO of Aido.com.
Aido.com is the GCC's online mega store with a wide range of categories in entertainment and lifestyle. It is an e-commerce venture of Viva Entertainment that was set up in year 2008. Products are sold at better prices than retail stores with free delivery and cash on delivery facility offered in UAE and soon in GCC.
Prior to getting on board as COO of Aido.com, Shailesh was managing the digital content distribution business for the parent company Viva Entertainment. That was after he completed his MBA from ESADE Business School in Barcelona. During his time in Spain he worked as a consultant on a couple of projects for a tech start-up and Unilever.
What motivated the founders to start Aido.com?
Back in 2008 Aido was started as another sales channel for products distributed by Viva Entertainment with a view to actively promote products or liquidate inventory. In late 2011 after having seen the potential for online channel we changed changed course/ strategy and have witnessed promising growth. There was a demand for a long-tail entertainment content - movies, books, games - which was largely not being met by brick and mortar retailers. We realized the potential as we kept getting requests from customers to supply products unavailable in retail stores in the region. With our import supply chain, experience with entertainment content and relationships with suppliers, we were able to meet this demand and decided to expand our offering. High-potential categories like consumer electronics and toys followed suit.
Most outstanding factor of Aido.com that distinguishes you from the competition?
Our products - in terms of the variety of categories and the depth within those categories. We also endeavor to bring in products that are not easily available in retail stores in the region and also retail a lot of quirky products that serve as great gifts. We offer these products at great value - our products are competitively priced and we offer free shipping and cash on delivery payment.
How important is mobile commerce for you?
Visits to our sites from mobile platforms, mainly iOS and Android, went up from 10% at the beginning of 2012 to 25% towards the end of the year. So optimizing our site for mobile is very important for us. We have been working on it and we're expecting to roll out a lot of changes in the 1st and 2nd quarter of 2013. The next step would be to develop mobile apps for iOS and Android.
What's the average margin you expect to get as an e-Commerce retailer?
Consumer electronics is a very competitive category with deal websites, marketplaces, new entrants trying to make a name and wholesalers with their own websites. The fast-selling popular brands are sold at 5-10% margins depending on the life cycle of the product. We offer a one year warranty which is of value to the customer and therefore rationalize our pricing to include that service. Entertainment categories offer a higher potential of margin between 10% to 30% depending on supply and demand. However, these are lower value items and the cost of delivery can affect margins if cart values are too low. Overall, our goal has always been to offer a megastore experience with our categories and range of products which in turn would raise our average margins and repeat purchases.
Can we get an insight in to Aido.com's sales volume and net profit for last year?
2012 was the year we could see tangible growth in all metrics. It has given the team and the owners the confidence to implement what we've planned.
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?
All those factors actually matter a lot more than social media presence when it comes to conversions. Social Media has been useful for us to generate brand visibility, engagement and customer service. It is also challenging to get customers to move from browsing on social media platforms onto your website and keep them there all through the purchase process.
Because we offer long-tail content, browsing capabilities and experience is absolutely paramount and we'll be rolling out a lot of changes shortly to improve that.
Any plans to start a retail store?
None at the moment, but a lot of customers ask us if we have stores, although it is a completely different proposition, there could be certain advantages - scale, reputation, buying power and so on. But no plans to do that at all.
Biggest challenge in the region for your e-commerce start up?
Quite a few, most of all managing to run on a sustainable cost structure until we gather critical mass of repeat customers. Getting your brand to be seen and trusted and tapping the Arabic customer base across GCC are other challenges which if and when overcome would change the economics of retail in the region.
What do you think will happen to the e-Commerce industry in 5 years in the region?
I strongly believe that a lot of brick and mortar retailers will move online within 12-18 months to regain some of their business and customers or at least try and prevent loss of market share. We'll also see a lot of new entrants as competition - not only direct competition other players who would on a broader scale compete for time and money of customers.
Your biggest competitor?
Differs from category to category, including online and offline. On a broader level, some of categories like movies could be seen to compete even with movie rental services, cinemas and other activities. Although we have observed the trend only over a short period of time, during summer sale of movies tends to spike up.