In a region where address and postal systems are not standardised, Fetchr is tracking success with its GPS-enabled mobile delivery app…
Delivering the goods
You’re sat in an obscure little cafe having a coffee and catching up on e-mails when someone taps you on the shoulder. It’s your Fetchr driver, delivering the parcel you ordered online yesterday. The cafe doesn’t even have an address, but the courier still managed to find you. This isn’t some far-fetched reality, it’s the service provided by Fetchr the region’s hot new delivery app.
“Receiving a package has always been a painful experience. We want to change that and make the shipping experience as delightful as shopping,” smiles Idriss Al Rifai, CEO and Founder of Fetchr. No one has time to sit at home all day and wait for the doorbell to ring. Rifai gets that and he has designed his business to work around the customer’s schedule not the other way around. The app uses patented technology to turn your phone’s GPS location into an address. No need for building names or zip codes.
Last year Fetchr was named Forbes’ MENA Startup of the Year and Rifai claims the business is seeing 80 per cent QoQ growth. The service is already available in the UAE, KSA, Bahrain and Egypt and Rafai has set himself a target of being in eight new countries by the end of 2017. In the courier and delivery services market, an industry worth US$242 billion globally, the app has the potential to make a real splash. If Rifai can harness the power of geolocation to the full we betcha Fetchr can do for deliveries what Uber has done for transport. And that’s big.
Already an e-commerce aficionado, Iraqi-born Rafai was working for regional fashion website MarkaVIP when he had the idea for Fetchr. So many customers were submitting order forms with incomplete addresses that he decided to seek a solution. Building an in-house logistics department, Rafai was able to expedite services and reduce the number of unsuccessful deliveries. “After implementing the changes I saw a huge jump is results – it made me curious about what I had created,” the entrepreneur explains.
Leaving MarkaVIP, Rafai set out on his own to form the foundations of Fetchr. The Founder, who holds an MBA from the University of Chicago’s Booth School of Business, invested US$300,000 of personal savings and sourced another US$1 million from friends and family in a seed round. With the first flush of funds, Rafai started work on the app in September 2012. With the help of four developers, the businessman spent the next nine months perfecting the platform before bringing it to the market in June 2013. “To be successful first and foremost you need a kick-ass product. We worked very hard on the IPO integration as well as the front and back end to deliver just that,” he asserts.
Putting the logic back in logistics
The result is a cloud-based solution that is constantly changing. The app is smart: if you change location it will follow you there. When first booking a delivery you decide where you think you’ll be at a certain time. But if life gets in the way – as it is want to do – you can amend your location. “When the driver is on his way a notification is automatically pushed through the app to ask the customer to share their current position,” Rafai explains. Proving how popular this flexibility is, the founder reveals that some 70 per cent of customers change their location. But, interestingly, about 80 per cent are still within 500 metres of their original spot. But it’s not just the clients that are being followed. Fetchr also GPS tracks its drivers to ensure customers have the most accurate ETA. Messengers also work off a tablet which automatically tells them the fastest drop-off route. Who knew a courier service could be so competent?
Rafai’s initial injection of US$300,000 savings and US$1 million from seed funding started him off on his journey, but it couldn’t see him through to his end destination. Fetchr needed the guidance, direction and – not least – finances of a venture capital firm to take it to the next level. With considerable experience working Middle Eastern markets, it made sense for Rafai to pursue partners in MENA. But the entrepreneur was disappointed by the options he found. “VCs were offering me really low valuations of the company and very harsh financing terms. They were more concerned with equity and revenue that seeing how Fetchr promised to shape the market long term,” the Founder explains.
Finding a dearth of daring VCs in the desert, Rafai sought more fertile ground in Silicon Valley. Giving himself just one month to secure funding, the entrepreneur filled his schedule with networking, meetings and pitches. He won six rounds in a row and found himself in conversation with Joy Ajlouny, an American-Palestinian Silicon Valley entrepreneur. “She came on board as Co-founder and, with the help of her connections, last July New Enterprise Associates (NEA) took us under their wing,” Rafai recalls.
It was a victorious play: Fetchr raised US$11 million in series A funding, led by NEA. The investment was the largest ever received by a start-up in the Middle East from US based venture funds for a Series A. NEA’s Chairman even sits on the Fetchr board, something Rafai still cannot quite believe: “he has really taken a chance on us. NEA has a tremendous track record; 28 per cent of companies they invest in go to IPO, so all eyes are on us!” With Mobily, the Saudi-based venture capital arm of Eti-had Etisalat, announcing that it too was investing in Fetchr last August, it seems the company has found the support it was looking for.
Regulations and red tape
Indeed, it is encouraging to see local VCs take an interest in the platform, especially since it was nearly strangled by the strict rules that govern doing in the Middle East. “Regulations can be a real challenge,” Rafai notes, “Dubai is trying very hard to make business better here, but the reality is that the environment can very nearly kill a start-up,” he continues. Shareholder agreements, trade and office licenses all need to be authorised and paid for before a business can even begin trading. “If you raise US$200,000 in a venture capital round you will probably spend half of it on legal fees to just get past the red tape,” the founder laments. He claims the situation improves as the business grows, but this too is easier said than done.
“It can be hard to scale a business in the UAE,” he asserts. For a while Rafai had to press pause on Fetchr’s growth as he wrestled with local legislation. In Dubai World Central (DWC), the free zone Fetchr is registered under, the number of visas a company is allocated corresponds with the square footage of the office space. For an e-commerce courier company this threw a major spanner in the works. Why would Fetchr want extra offices when the majority of its 600 odd employees spend the day out delivering parcels? “It was a ridiculous prospect for us, but thankfully DWC has been very flexible and understanding,” Rafai explains.
Having successfully jumped through Dubai’s many hoops and satisfied all the small print, Fetchr is ready to fly. Literally. Rafai is determined to drop pins in eight new countries between now and the end of 2017. And although the Middle East is the main target, the founder wants to dispatch operations outside MENA too. “We’re growing very fast and doubling every few months – we just need the network effect now,” he explains. There can be little doubt about the product’s potential to perform abroad. Its appeal is universal. In the past decade consumer behaviour has changed beyond recognition; any company flexible enough to cater to new habits stands to benefit. Still unconvinced? We’ll let you mull it over while we catch an Uber to our Airbnb accommodation.
Rushika Bhatia Editor
Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.