E-commerce is gaining a lot of popularity in the MENA region and the competition is heating up between a few of the bigger portals. Recently Marka VIP was in the news for raising USD 3 million in funding from high profile U.S, European and Middle Eastern investors, in order to expand and increase their presence across the region. MarkaVIP quickly captured the attention of shoppers across the Middle East when it launched in Jordan and Saudi Arabia in November 2010. Almost Eight months later, the company is rapidly approaching half a million members and attracts between 2,000 and 4,000 new members daily.
After hearing this we decided to contact Marka VIP and see if they would be able to answer a couple of questions. Fortunately for us we managed to get in touch with Ahmed AlKhatib, the CEO and Founder of Marka VIP and he was kind enough to answer our questions. Below is the first part of this series of Q&A:
Why did MarkVIP start?
The flash sales model is already well established in the U.S. and Europe and we saw an opportunity to adapt it for the Middle East market and capitalise on the relatively underdeveloped e-commerce industry here.
This model works on the forces of time urgency and scarcity. At MarkaVIP we source excess or introductory inventory from premium brands worldwide to be sold to our discerning members within a limited period of time. In return, the customer gets much lower prices than they would normally be offered and opportunities to purchase products they may not otherwise have.
We believe that the Middle East is most definitely ready for a world-class private shopping club like MarkaVIP. Consumers are showing great confidence in our model, with membership numbers rapidly approach half a million and two to four thousand people applying for membership daily.
Where is MarkaVIP based? When was MarkaVIP launched and when was the GCC expansion completed?
We launched MarkaVIP in Jordan and Saudi Arabia in November 2010. After raising USD 3 million in funding from high profile European, U.S. and Middle Eastern investors, we recently expanded to the rest of the GCC as well as Lebanon.
We now have a team of 85 people in offices across the Middle East, the United States, Europe and Turkey.
Any plans to expand to North Africa?
After only eight months we are already operating in eight markets – the GCC, Jordan and Lebanon. We plan to continue our ambitious expansion strategy, and North Africa is an area of interest to us.
Who are the key players at MarkaVIP?
We have created a great team at MarkaVIP, combining e-commerce professionals, fashion industry heavy weights and young up-and-coming e-commerce talent.
I am the Founder of MarkaVIP and hold the position of CEO. After living and working in Silicon Valley for 10 years, I moved with my family to the Middle East in early 2010 and founded MarkaVIP in Jordan in November of the same year.
Some of our other key team members include Yahoo’s former Chief Data Officer, Usama Fayyad, who is an investor in MarkaVIP and a Director on our board. We are also fortunate to be joined by Amer Abu Laila who is our Chief Technology Officer. Amer was previously the Chief Technology Officer of 3alarasi.com and is a recipient of the Jordan Web Award. Bringing a wealth of knowledge gained from 15 years experience in the textile and fashion industry in Europe and Turkey, Melih Ozcanli is our Director of Sourcing.
We believe our success to date is testament to the great team we have set up and our shared desire to bring a unique and enjoyable shopping experience to our members.
How much was the initial funding and how was it secured?
International investors are acutely aware of the e-commerce potential that exists in the Middle East region. We received significant interest from international players looking to invest in our business when we were looking to raise capital, and in May this year we secured USD 3 million in funding from Hummingbird Ventures and Kawar Group.
To date how many investors are involved?
We have several leading investors from the USA, Europe, Turkey and the Middle East.
What are some of the obstacles that MarkaVIP faced when securing funding?
A common concern for international investors looking to this region is the doubts over political stability, as well as the impact of the economic downturn here and the often opaque regulatory environments.
We worked with interested international investors to help them understand some of the challenges in this region, but also the opportunities that exist here. The strength of our business model and the relatively untapped e-commerce opportunities in this market combine to form a compelling proposition that investors are usually quick to capitalise on.
Stay tuned for our next article with more answers from Ahmed AlKhatib, where he tells us more about their marketing strategy and what they do to stay ahead of the competition.