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Jeddah - Yasmine El Tohamy - ‘Uber of Saudi Arabia’s online gifting industry’ sees 1,500% surge in orders during pandemic
JEDDAH: Resal – a startup often referred to as “the Uber of Saudi Arabia’s online gifting industry” – reported a 1,500 percent year-on-year increase in sales last year, as workers stuck at home as a result of the coronavirus disease (COVID-19) pandemic embraced e-commerce portals.
“I think during the pandemic, the e-commerce and the digital products and services helped a lot of people to survive, to send a reward and gifts, to help people educate their child and help us to deliver food and even medicine or health (services),” Hatem Kameli CEO and founder of Resal, told Arab News.
However, he said the move to online had already begun before the virus outbreak and the health crisis had only helped to drive its acceleration. “Their behavior had changed even before the pandemic. The pandemic helped to explain the impact of e-commerce and digital startups.”
Resal is a digital platform specialized in facilitating and simplifying the gifting experience and allows users to order a range of gifts, such as flowers, chocolate, and other items.
It had a soft launch in Jeddah in September 2016 and officially started operations in February 2017. “Since that time, we developed a lot of technologies and developed infrastructure to be ready for any scalability opportunity, any opportunity in the market to scale, to grow, and to catch the market share,” Kameli added.
The company currently delivers to 40 Saudi cities and is planning to expand outside the Kingdom this year.
“We are planning to expand our services in more GCC countries. We launched last year in Kuwait and Bahrain and we are planning to expand our services to the UAE and other GCC countries, and if we reached that, then we will expand more to Cairo and Alexandria, in Egypt,” he said.
With customers at home, the company enjoyed a 1,500 percent surge in orders and also expanded its network to include prominent partners such as Jarir, Careem, Mrsool, Al-Nahdi pharmacy, Landmark Group, and more than 300 suppliers and partners throughout the region.
In order to capitalize on this growth, it is also aiming to introduce new services for businesses and launch a new e-gift service, as well as having other projects in the works.
Kameli said social distancing and increased hygiene measures had not heavily impacted on overall costs, but the company had witnessed a drop in revenue in April.
“I don’t think it impacted because we are a small team and they understand the situation and we didn’t decrease the cost but the pandemic – especially in April – impacted the revenue side. We dropped in revenue, but we changed everything to be realigned and to grow again, especially in May, June, and July.
“We didn’t change the operation model, but we did some optimization to be more efficient to reach our objectives,” he added.
The company raised funding in two rounds, the first in January 2018 and the second in June 2019, and another bid for funding is planned later this year.
On the potential of a stock market listing, Kameli said: “It is the dream of any entrepreneur or any startup to enable people to buy and sell through their stock and shares.”
Resal’s success can be put down to Saudi consumers’ embracing of e-commerce and online shopping and the dominance of digital payments in the Kingdom.
Talat Zaki Hafiz, economist and secretary-general of the media and banking awareness committee for Saudi banks, recently told Arab News that digital payment transactions in the Kingdom jumped by 75 percent in 2020, while cash withdrawals from ATMs and other payment points fell 30 percent over the same period.
At the same time, the value of digital payments rose 24.1 percent last year to around SR349 billion ($93.7 billion), as the number of payment points jumped 70 percent throughout the year.
Evidence of the growing preference for e-commerce over cash was seen during the Black Friday sales late last year. A survey carried out by advertising platform Criteo of 900 Saudi online consumers found that around 40 percent of respondents said they planned to buy more products online, with household products, groceries, and beauty and hygiene items proving most popular.
Overall, the research found that 58 percent of Saudi respondents were more comfortable shopping online in 2020 than in-store.
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