On the sidelines of Unbound Bahrain, an initiative by Economic Development Board (EDB), Bahrain grocery delivery startup GetBaqala's founders talk to YourStory about the journey of starting up and growing their brand in the Middle East.
At a glance:
Founders: Amjad Puliyali and Aboobacker Shinan
Year it was founded: 2016
Where is it based: Manama, Bahrain
Sector: Online grocery and e-commerce
Problem it solves: Grocery delivery
Funding: Seed funding
Amjad Puliyali was working for Bengaluru-based growth marketing platform Vizury, helping set up the Middle East operations. Once the region was covered, he went on to work with BigBasket. “I felt that they were doing a brilliant job. Cracking a market like grocery, and doing it so efficiently was amazing. I felt that I too needed to start something on my own,” says Amjad.
Having closely worked with and brought in clients like Souq.com (which was acquired by Amazon), Etihad Airways, Careem (UAE’s Uber), Amjad felt his heart was in ecommerce. “I was very impressed with BigBasket’s level of data analytics and its operational size. Being a BigBasket consumer myself, I felt the need to start up in the space,” he adds.
However, online grocery is a tough nut to crack, and Amjad knew right off the bat that he needed to rope in someone who knew and understood the nitty-gritty of the business. So, he got on board his long-time friend Aboobacker Shinan, who was then the CFO at Hypermarket UAE, as a co-founder. The duo was in Chennai together in 2007.
A focus on the Middle East
Having lived in Dubai for decades, for Amjad the Middle East felt like the logical place to start the business. “We already knew the space. While we are Indians, we had a network and contacts in the Middle East,” says Amjad.
After doing his research and meeting Economic Development Board (EDB) in Mumbai, Amjad realised that Bahrain would be the place to start up in. He says,
What attracted us was the size of the country; it has a population of 1.3 million. The idea was to go deep into this market, dominate it and then expand. Bahrain also has a lot of initiatives that make it easier for startups to build their business.
Besides, the fact that it is a mobile-first economy sealed the deal.
What has also gone a long way is a supportive ecosystem in Bahrain. They got aid from Tamkeen, a semi-governmental organisation in Bahrain.
“Tamkeen helped us acquire talent. We get 70 percent salary support for the first year, 60 percent in the second year and 50 percent in the third year. They helped us hire freshers from the University of Bahrain and the support is to help skill them,” says Amjad.
Focus on convenience
The founders started GetBaqala as a mobile-first grocery startup, with 1000 stock keeping units. The team now has over 8,000 SKUs on its app. The value proposition for GetBaqala was convenience and selection. From day one, GetBaqala focused on fresh produce, one of the most difficult segments to crack. Amjad explains,
The perception of quality comes from fruits and vegetables, not Ariel detergent. The category of fresh produce, the team felt, would make the brand, as it is something people buy at least four times a month. Since it is Bahrain and the Middle East, we have cold storage vans. We initially made the mistake of trying to deliver products in a regular van or bike. The heat doesn’t sustain them.
Starting with one developer, who worked on a part-time basis from Bengaluru, the startup now has a team of five full-time engineers and a total team size of 20.
Finding the right model
Initially, the team started with the hyperlocal model, by working with convenience stores and having the products delivered to the customers. It, however, realised that the model wasn’t viable and it didn’t help them get the unit economics and margins right. GetBaqala then pivoted to an inventory-driven model by setting up its first warehouse of 1,000 sqft. Now, it has an 8,000 sqft warehouse.
Setting up the warehouse, however, did not come cheap. While there is a government push towards startups, raising capital is still a challenge. “We didn’t restrict ourselves to Bahrain or only to the Middle East for that matter. We spoke to several people and investors globally,” says Amjad.
The Middle East ecommerce scenario seems to be fast growing. According to an investment report by Magnitt, the ecommerce market is expected to double and touch $69 billion by 2020. The UAE is estimated to be at $27 billion, followed by Saudi Arabia at $22 billion. Ritesh Tilani, Founding Partner, Enhance, a UAE-based fund, says,
The investments in the Middle East are also picking up. This is more so because of Souq’s acquisition by Amazon. The market here, while definitely not as big as India or China, has a lot of potential; the purchasing power parity is higher, and the number of people choosing to go online is much more.
Funding and numbers
GetBaqala got its first round of funding from Silicon Valley-based Social Capital, through their CaaS (Capital-as-a-Service) initiative. It was the only startup from the GCC (Gulf Corporation Council) to be a part of the initiative. It also garnered investment from Saudi Arabia-based Manafa VC, and Bahrain Development Bank’s Seedfuel.
This funding helped the team scale and grow. It has an average basket size of $45, with 19 items typically. Its topline is $100,000, which, the founders believe, will grow by 10x next year.
The team is now in the process of raising its next round of funding. Amjad adds that while the existing investors are looking to pump in more money, new investors are showing interest to come on board as well.
“We are now looking to expand into Saudi Arabia. We also are setting up a tech centre in Bengaluru, where we will be sending our engineers for training. From Saudi, we hope to look at the larger GCC market and MENA (the Middle East and North America) region. We are also tying up with local farmers for fresh produce,” says Amjad.