In an exclusive interview, the general manager of Souq.com in Egypt, Omar Elsahy, told Daily News Egypt that the company plans to establish four new warehouses, bringing the total up to 16 within the next two months.
Despite the growth of the e-commerce sector, laws have not yet been implemented to regulate the process. How could this affect the sector?
E-commerce is currently subject to the general trade law and its amendments, which included some clauses related to e-commerce that fall under the name of “Remote Trade”. However, there is no law that organises e-commerce activity in detail so far.
Did you participate in the discussions launched by Information Technology Industry Development Agency (ITIDA) to develop a legislative framework for e-commerce in Egypt?
The Ministry of Communications and Information Technology and ITIDA are working on developing a legislative framework to regulate e-commerce activity. ITIDA sought the assistance of Souq.com and some other companies to participate in the workshops to prepare a vision of a legislative framework to regulate e-commerce activities.
What are the main features of the currently-prepared e-commerce law?
According to the new draft law, there will be licences for providers of e-commerce services and, therefore, they would be verified on the websites so that the customer can recognise approved e-commerce websites. This process would facilitate the work of the Consumer Protection Agency to preserve the rights of customers.The new law is still under discussion.
When e-commerce started in Egypt, there was more than one company, but now 70% of the market is limited to your company and another competitor. How do you think this could affect e-commerce activities in Egypt?
We have more than one competitor in the Egyptian market as it is estimated that there are 149 e-commerce companies. According to reports, a number of new companies—ranging from 220 to 250—will launch their activities in the Egyptian market this year. This shows that there are many competitors in the market which is good for customers.
Not every company has the ability to continue business and achieve success, which often makes customers feel that the competition is limited to just two or three companies.
Why do some e-commerce companies fail in Egypt?
The majority of companies only perceive e-commerce as a platform for selling products. In fact, it is an industry that is based on building trust with customers through several elements, such as offering a wide base of products to suit all tastes and different social segments, providing customer service in a professional manner that guarantees customers’ satisfaction, providing several paying solutions whether online or through traditional ways, giving customers the option to replace or refund products, and delivering products without delay.
Providing all of these services quickly requires a professional customer service sector and logistics centres in order to shorten delivery times. Moreover, providing the services quickly requires a large quantity and selection of products to be available for customers at any time, which requires huge investments.
That is what Souq.com has done; we have many warehouses in addition to our own shipping company, which guarantees that the product will be delivered to customers in one day with a maximum delivery period of three days.
How do you find the e-commerce market in Egypt?
Indicators show that the business of e-commerce in Egypt is growing rapidly and will be one of the businesses attracting investments in the next four years. Indicators show also that the size of e-commerce in Egypt exceeded $1bn by the end of 2015, registering $1.2bn. This evaluation includes online travel bookings and online bill payments.
E-commerce in Egypt is expected to grow by 65% by the end of this year. Some sectors will double their sales achieved through e-commerce, such as electronics and home appliances. Now, more than 17% of internet users in Egypt buy online, which is 15.5 million people. However, this number represents only 1.5% of the total size of commerce, which shows that there are significant growth opportunities in the sector.
International indicators show that e-commerce in some countries acquires 10-15% of the total local commerce, such as the United States and France.
Are there new players expected to invest in the Egyptian market?
The market is attractive for investment; we hope the sector will attract a number of huge companies in the next period.
What challenges has the Egyptian market faced recently?
Challenges should turn into investment opportunities, the lack of credit card holders is a challenge for the e-commerce industry, but it was an investment opportunity for electronic-payment solutions companies. We implemented mechanisms for repaying the cost of the products instead of using credit cards, such as electronic payment companies or payment service upon receipt.
What do you think about the online advertising market in Egypt?
Prices for online advertising increased due to the increase of the industry’s size in Egypt, because they are ultimately subject to supply and demand.
Will you provide a value-added service during the coming period?
We focus on partnerships with a number of companies to provide value-added services to our clients, such as replacing the points of Vodafone with products from Souq.com or with a free subscription for internet services on your phone when you purchase a mobile phone or a tablet from Souq.com in collaboration with Vodafone, what helps us to maintain customer loyalty to us.
What features are you providing to the Egyptian Market in your services?
Egypt is one of the most important e-commerce markets in the Middle East. The biggest growth of activity in the region will happen through the Egyptian market owing to the high population and because young people represent the largest segment in society as well as having opportunities to use the internet.
We currently have a logistics warehouse as a major centre for distributing products to the rest of the stores, and we have 11 stores across all regions in Egypt. We will open four other stores during the coming months, so the number of stores will rise to 16, distributed across Cairo, the Delta, Upper Egypt, and Sharm El-Sheikh.
We established our own shipping company to make sure the product is delivered as quickly as possible to our customers. In the coming period, we will focus on our after-sales services such as: providing maintenance services for some electronic devices such as accidentally warranty.
What is the maximum delivery period?
Orders are currently delivered within one to three days. However, we aim to lower this to a maximum of 24 hours.
Are you considering investing or acquiinge companies in the coming period?
We are studying this. But we aim to offer value-added services to complete the services we offer and lift our growth potential. An agreement will be announced in that framework in the coming period.