Ronaldo Mouchawar is standing at the entrance of Souq.com’s cavernous warehouse in Dubai’s Al Quoz district, getting patted down by one of his own security staff. “There’s always rumours flying around,” the chief executive smiles, batting away a question about a recent report that suggested his firm might be bought by American internet leviathan Amazon. “You see, we touch on so many people. “There was a recent study in the UAE that 50 percent of online shoppers have bought on our site, and we know from our traffic that 50 percent of the population come to the site once a month.” Perhaps it’s not surprising that the only route in and out of the Souq.com fulfillment centre looks more like an airport security barrier than a passageway. Despite only being opened just over a year ago, the warehouse is packed to the rafters with flat-screen TVs, tablets, clothing, diapers and jewellery. For Souq.com itself, it’s not just products on the shelves that are starting to stack up — the numbers are looking pretty good as well. It’s by far the Middle East’s biggest e-commerce site, and quite possibly the region’s biggest website full stop. It sells well over 200,000 products, with a network of almost 75,000 traders.
It grew last year by 170 percent and has expanded ten times over in the last two years alone, with around 22 million visits last month. Small wonder, then, that investors have been beating a path to the firm’s door. Launched in 2005 as an auction site linked to internet portal Maktoob, the site has already raised $150m in financing, with $75m received from Naspers just two weeks ago. With Naspers already having a 36 percent stake in the company prior to that investment, and with the South African firm remaining a minority partner, that deal values Souq.com at $577m, at the very least. Not bad for a firm that started out with only five employees less than a decade ago. But you get the impression from Mouchawar — a tall, affable Syrian who co-founded the site alongside the Jabbar Internet Group’s Samih Toukan and Hussam Khoury — that the story is just getting started. “If you look at what’s really transacted online as opposed to offline in the region, we still have a huge gap to fill,” he says. “There’s 1.5 to maybe 2 percent in this market sold online, whereas elsewhere in the world is double digits — in the UK, it’s maybe 18 percent.“And there are some categories that are at 20 percent, so there’s a whole shift that’s still to come.” Souq.com has evolved from its origins as an auction site to become a retail portal and a marketplace for third-party sellers. For Mouchawar, the switch away from Maktoob, which was bought by Yahoo! in 2009 made sense if the site was to work as a pure-play e-commerce provider. “We initially tried with Maktoob to do certain verticals, like ‘Shop@Maktoob’, but really Maktoob catered to more of a younger audience,” he says. “So at one point, we sat together and came up with a plan to introduce a real commerce offering, to really focus on transactions and build the trust around that.” The inspiration for the brand’s name — ‘souq’, of course, means ‘marketplace in Arabic — came from the town where Mouchawar was born. Aleppo is one of the world’s oldest trading hubs, and is also home to some of the planet’s most famous souqs. “My father is a merchant, and commerce is the heartblood of Aleppo,” he says. “I studied engineering — so a lot of technology — so e-commerce as a fit was natural. I understood margins, categories, trade, and then you combine all that with technology and the internet, it’s a powerful vertical to be in. In part, Souq.com launched at a particularly fortuitous time. By focusing on electronic devices — which still make up 40 percent of its overall sales — and kicking off in the UAE, the site immediately tapped into huge demand from a young population with high disposal income. It also rode on the back of first the smartphone boom, and then the introduction of tablets. Even now, Souq.com’s average basket size is higher than that of Amazon. Perhaps even more crucial than any of those factors has been the huge growth in internet penetration in the region, which was at less than 10 percent at the time the site launched. According to the United Nations Broadband Commission’s figures for 2012, mobile internet penetration in the Gulf countries now ranges from between 50 to 75 percent. However, the MENA is still a nascent market when it comes to e-commerce, with Paypal and Visa both estimating the value of the sector in the region at around $15bn. That sum is dwarfed by the industry in the world’s biggest market, Europe, which amounted to a whopping $483bn in 2013, according to the European Multi-Channel and Online Trade Association (EMOTA). However, the region is doing its best to catch up. While e-commerce grew by a healthy 17 percent in Europe in 2013, it’s rising by about 60 percent every year in the Middle East.
It grew last year by 170 percent and has expanded ten times over in the last two years alone, with around 22 million visits last month. Small wonder, then, that investors have been beating a path to the firm’s door. Launched in 2005 as an auction site linked to internet portal Maktoob, the site has already raised $150m in financing, with $75m received from Naspers just two weeks ago. With Naspers already having a 36 percent stake in the company prior to that investment, and with the South African firm remaining a minority partner, that deal values Souq.com at $577m, at the very least. Not bad for a firm that started out with only five employees less than a decade ago. But you get the impression from Mouchawar — a tall, affable Syrian who co-founded the site alongside the Jabbar Internet Group’s Samih Toukan and Hussam Khoury — that the story is just getting started. “If you look at what’s really transacted online as opposed to offline in the region, we still have a huge gap to fill,” he says. “There’s 1.5 to maybe 2 percent in this market sold online, whereas elsewhere in the world is double digits — in the UK, it’s maybe 18 percent.“And there are some categories that are at 20 percent, so there’s a whole shift that’s still to come.” Souq.com has evolved from its origins as an auction site to become a retail portal and a marketplace for third-party sellers. For Mouchawar, the switch away from Maktoob, which was bought by Yahoo! in 2009 made sense if the site was to work as a pure-play e-commerce provider. “We initially tried with Maktoob to do certain verticals, like ‘Shop@Maktoob’, but really Maktoob catered to more of a younger audience,” he says. “So at one point, we sat together and came up with a plan to introduce a real commerce offering, to really focus on transactions and build the trust around that.” The inspiration for the brand’s name — ‘souq’, of course, means ‘marketplace in Arabic — came from the town where Mouchawar was born. Aleppo is one of the world’s oldest trading hubs, and is also home to some of the planet’s most famous souqs. “My father is a merchant, and commerce is the heartblood of Aleppo,” he says. “I studied engineering — so a lot of technology — so e-commerce as a fit was natural. I understood margins, categories, trade, and then you combine all that with technology and the internet, it’s a powerful vertical to be in. In part, Souq.com launched at a particularly fortuitous time. By focusing on electronic devices — which still make up 40 percent of its overall sales — and kicking off in the UAE, the site immediately tapped into huge demand from a young population with high disposal income. It also rode on the back of first the smartphone boom, and then the introduction of tablets. Even now, Souq.com’s average basket size is higher than that of Amazon. Perhaps even more crucial than any of those factors has been the huge growth in internet penetration in the region, which was at less than 10 percent at the time the site launched. According to the United Nations Broadband Commission’s figures for 2012, mobile internet penetration in the Gulf countries now ranges from between 50 to 75 percent. However, the MENA is still a nascent market when it comes to e-commerce, with Paypal and Visa both estimating the value of the sector in the region at around $15bn. That sum is dwarfed by the industry in the world’s biggest market, Europe, which amounted to a whopping $483bn in 2013, according to the European Multi-Channel and Online Trade Association (EMOTA). However, the region is doing its best to catch up. While e-commerce grew by a healthy 17 percent in Europe in 2013, it’s rising by about 60 percent every year in the Middle East.
