Padash Raises $125,000 Pre-Seed To Bring Instant Food And Grocery Delivery To Iraq
Q-commerce Startup TipTop Raises $5 Million To Expand In Iraq
The continued pandemic-driven disruptions impacting the e-grocery segment have led to the emergence of q-commerce, a new vertical which has recently gained substantial traction across the Middle East. With the ongoing surge in digital ordering and drastically evolving customer expectations, food and grocery delivery businesses are racing to ride the q-commerce boom utilising hyper-local micro fulfilment centres, also known as dark stores, used solely to pack and ship online orders.
The q-commerce sector has been growing steadily over the past few months, with many existing players and new entrants diversifying their product offerings within the digital grocery delivery segment. Earlier in December, Dubai’s Careem introduced Careem Quik, an online grocery delivery service that promises to deliver items in 15 minutes. Over the past couple of years, Delivery Hero-backed Talabat has been focusing on expanding its grocery delivery business through its q-commerce store Talabat mart (t-Mart), which is currently available for users in Bahrain, Egypt, Jordan, Oman, Qatar and Kuwait.
Startups working in this segment have emerged as a popular target for investors too. Last year, a handful of q-commerce startups managed to raise funding. These include Saudi Arabia-based Nana, Morocco’s Epicerie Verte, UAE-based Yalla Market and Egypt’s Rabbit app, Appetito and Breadfast, which raised $26 million in one of the largest financing rounds of 2021. This year also kicked off with Kuwait’s Fix closing a $2.5 million in pre-Seed.
Across the Middle East, the total addressable market of q-commerce is set to be worth $47 billion by 2030, growing by 17 per cent per annum, according to research firm RedSeer. The growth witnessed in the sector mirrors a global upward trend led by Germany’s Gorillas and Turkey’s Getir.
Inspired by the likes of these models, Iraq-based entrepreneurs Hasan AlSoud and Kerem Aksoy founded TipTop earlier in 2020 to tap into the growing demand for a faster delivery experience. The startup is said to be the first to introduce the dark stores concept to the Iraqi market
Leveraging a wide network of warehouses in Erbil in the Kurdistan Region, with over 3000 stock-keeping units (SKUs), TipTop aims to deliver groceries in under 15 minutes. The startup is also building more city-wide large dark stores with close to 10,000 SKUs, as part of a newly launched feature called TipTop More aimed at availing more products to its customer at a delivery turnaround time of 45 minutes.
Similar to other parts of the world, the consumer’s behaviour in Iraq has changed. People are now leaning towards convenience, meaning that they would be paying more online than in the store for the exact same item only to have it delivered at a faster time with premium quality and packaging,
AlSoud.
TipTop recently closed a $5 million Seed round from Kurdistan-based mobile operator Korek Telecom to expand its q-commerce operations beyond Erbil. Since its founding, the startup has raised a total of $7 million, making it one of the top-funded startups in the country.
Food delivery
In its food delivery segment, TipTop currently services 50,000 users and works with 350 restaurants.
“TipTop’s food delivery business registered a growth rate of 400 per cent in H2 2021, up from 125 per cent in H1 of the same year. Delivery sales are expected to grow at least 20-30 per cent yearly through 2022,” AlSoud explains.
The food delivery market in Iraq has marked improvement thanks to the proliferation of smartphones and the surge in internet penetration rates, which currently stand at 76 per cent. While the majority of the orders are still placed offline, the Covid-19 crisis and the subsequent lockdowns have put a spin on the trend towards online ordering in the country.
Last year saw the entry of Talabat in Iraq, which also operates in Erbil, the capital of Kurdistan and the epicentre of food delivery services in the country. Local incumbents operating in the same vertical such as AlSaree3 and Lezzoo also managed to raise funding.
Despite the huge potential the Iraqi food delivery market holds, there are regulatory, technical and logistical challenges to surmount.
For instance, the country lacks strong internet coverage, making it difficult for customers and couriers alike to effectively use simple features like Google Maps. In terms of regulations, there are still no clear laws governing the e-commerce space. It is very difficult for companies to register motorcycles for their couriers.
As a result, and given that third-party logistics companies (3PLs) are incredibly rare in Iraq, startups working in delivery have to build an entire supply chain from the ground up on their own. This tough business landscape led super app Careem to suspend its food delivery operations in Iraq last year, only a couple of months after the rollout of the service.
However, for AlSoud, the dominance of cash on delivery (COD) as the primary payment method is the biggest issue facing his business. TipTop tends to drive the adoption of digital payments by offering rewards and cashback on prepaid orders.
“Online payments make up only 10 per cent of total transactions. Iraq hosts around 35 banks in Iraq, yet, the culture of online payments has not yet taken hold,” he adds.
This article is from Wamda.