Saudi Entrepreneur on Ecommerce in the Middle East
I recently spoke with him about the hurdles — and the opportunities — in launching an ecommerce company in the Middle East. What follows is the full audio interview and the transcript of it, edited for length and clarity.
Practical Ecommerce: What is the state of ecommerce in Saudi Arabia?
Hamza el Bayed: Ecommerce in Saudi Arabia is fairly new. The mentality of the Middle East with ecommerce, in general, is a bit different than Europe and the States. It’s something very new here, and people are still struggling with the concept of purchasing online. But it’s getting there.
PEC: Tell us about Ora La Moda, the company you’ve launched?
Bayed: I started with the concept of starting an online business with my wife in late 2015. We studied the market on what was the best product or service we can provide to the Middle East. We came up with fashion and accessories. It also doesn’t require so many licenses, and it doesn’t require a huge warehouse.
We found a couple of similar companies already out there. They’re quite large, so our market share would be fairly small. The competitors were much stronger than us. Rather than becoming a reseller for major brands, we decided to become our own brand, concentrating on quality. We didn’t just try to make a quick buck.
It took us about six months to set up the entire concept from design, to colors, logo, and a company name. It wasn’t very easy, but I believe we did a good job.
Our target segment is over 25 years old. These are the people who have jobs, who have credit cards, who can afford to pay for quality. The younger generation, especially here in Saudi Arabia, prefer to go out rather than shop online. Shopping is basically their outlet.
PEC: So you sell primarily female fashion accessories?
Bayed: At the moment, yes. We didn’t have much capital to start with, so we divided our launch into four different categories. If we can win the trust of the female segment in the Middle East, then we can grow into different sectors. After the female section, we can expand into infants, children, men, and start building up our catalog.
PEC: You speak very good English. How did that come to be?
Bayed: I lived in England for approximately 10 years. I went at a very young age, I think when I was 11, and I came back I think in 2006.
PEC: What are some obstacles to running an ecommerce business in the Middle East?
Bayed: From the time I spent in England, I learned so much on how I can set up this type of business. Here in Saudi Arabia, or in the Middle East in general, people expect a company that has lots of capital.
In Europe or in the States, a person can start from his garage and build up a business until it becomes, basically, a giant. That was a big challenge for us, on the limited funding that we had, to give our word saying that we’re trustworthy. This is one of the struggles that we are facing now, because we are a very small establishment.
So we started tackling these points, saying, okay, I have Norton Symantec on my site saying I am verified. Aramex, our shipping agency, is one of the leading shipping agencies in the Middle East, and they’re very trustworthy.
PEC: Many merchants in the United States use hosted platforms. But you use CS-Cart, licensed software.
Bayed: We have our own server that we are renting. We looked into many different platforms to use. We wanted something that we can edit, we can change, we can add on to, and that can be more flexible for our needs and, of course, multilingual. We had many different platforms, but with CS-Cart we found the flexibility that we need.
PEC: Where do you go for development help?
Bayed: We have two different companies that we work with. For issues specific to CS-Cart, we use Simtech Development, in Russia.
PEC: How did you learn your business skills?
Bayed: I majored in business administration, and I continued into master’s and doctorate studies. My father is a businessman and his father was a businessman. It runs in the blood, basically.
PEC: How do you manage shipping, payments, and inventory in Saudi Arabia?
Bayed: We have two different payment methods: cash on delivery and credit cards. With credit card payments, we went with two different companies, PayPal and 2Checkout. Both are based in the States.
Our main payment method is cash on delivery. With Aramex, when they deliver the item or the box to the customer, they collect the payment. They take a small fee, and then, at the end of the month, they wire transfer the remaining amount to us. Most of my sales, I think it’s about 80 percent, is cash on delivery.
PEC: Where are your customers located?
Bayed: At the moment, we’re only in the Middle East. We started to grow very recently to Europe and the States, because we are in a bit of a recession in Saudi Arabia.
There are a few countries that we cannot ship to, due to the law in Saudi Arabia. Some other countries, it’s a hassle or they’re very expensive to ship to.
PEC: Anything else?
Bayed: To anyone who wish to start a business, ecommerce is one of the easiest ways and it doesn’t require a lot of money to set up. If you know how to set it up, it’s fairly straightforward. You can start from as little as $50 and grow from that. Just know your market and what the people you want to sell to need. You can make a successful company out of it.