A Middle Eastern Housewares e-retailer seeks to replicate the Flash-Sale Success of Western Brands
Middle Eastern online retailer Wysada wants to replicate the success of such U.S.-based online retailers as One Kings Lane and Wayfair Inc., and now the flash-sale home furnishings retailer has $5 million in funding to finance its plans.
Wysada, which is Arabic for cushion or comfort, was founded in Amman, Jordan, in July 2012 by CEO Mohammad Musleh. The retailer says the just-announced funding represents the single largest Series A funding round for an early-stage e-commerce start-up in the Middle East. Leading the funding round was Badia Impact Fund, a venture capital fund belonging to Silicon Badia, a global group of venture funds based in New York City and Jordan
Wysada is growing and needs the cash to expand further, says Musleh, who was also one of the early members of MarkaVIP, a network of flash-sale sites in the Middle East. From June to Sept. 2014, the retailer has grown sales by 700% and over the last three months sales have grown by 35% each week, Musleh says. Wysada, which sells furniture, home furnishings and décor via limited-time sales from more than 700 brands into Saudi Arabia, Jordan and the United Arab Emirates, will use the money to hire new employees and to invest in buying and merchandising. It also aims to soon sell into new markets in the Middle East. Saudi Arabia is Wysada’s largest market today, followed by UAE and Jordan.
The Middle East landscape provides fertile soil for e-commerce start-ups, particularly for home furnishing retailers like Wysada that target young women. Middle East e-commerce is growing 30% annually, and seven out of the top 30 countries globally in terms of gross domestic product per capita are in the Middle East, Musleh says.
“E-commerce was nearly non-existent in the Middle East in 2008. Now it is experiencing extremely high growth, and people in the region have a lot of money,” Musleh says. He says investments in the region from the likes of German e-commerce incubator Rocket Internet AG illustrate the growth prospects. Rocket operates fashion e-retail site Namshi in the Middle East.
Wysada targets 25- to 45-year-old socially and digitally connected females, a key buying group, because 70% of the population in the countries Wysada sells into is under 30, Musleh says. They’re also important because women in the region have considerable spending power. “It’s a misconception that women in the Middle East don’t control a lot of money,” he says. “In Qatar alone, women control $5 billion worth of wealth.”
Wysada claims to be the first home goods e-retailer in the region. It is a big category, as the offline home goods retail market in the Gulf Cooperation Council is worth $6 to $7 billion, Musleh says. The Gulf Cooperation Council is a political and economic alliance of six Middle Eastern countries—Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.
Wysada has 75 employees and operates global offices including its headquarters in Amman, Jordan, a buying office in London and its main logistics hub in Dubai. The retailer shops the globe mainly in London, New York and Milan and ships the goods to its hub in Dubai, Musleh says. The site accepts credit and debit cards, PayPal and cash on delivery—a popular way for consumers to pay for online purchases in the Middle East.
“We have buying agreements with many brands where we have online exclusivity,” Musleh says. “We have a healthy relationship with a wide range furniture and lighting, kitchen and dining brands.”
Wysada is Musleh’s fourth start-up venture. In addition to MarkaVIP, he was a founding member of Middle East housewares retailer The One in Jordan, and also helped launch the Jordan franchise of high-end apparel and accessories brand manufacturer BCBG Max Azria.
Wysada is eager to tap the brain of successful retailers similar to its company that operate in the West. Speaking to Internet Retailer from California, Namek Zu’bi, managing partner of Wysada investor Silicon Badia explains he is in the U.S. because he is meeting with people who are in the online home goods retailing space in the U.S. and who worked at places like One Kings Lane and Wayfair to learn from them. “Through Badia [which has offices in the U.S.], I’m able to get warm introductions to them.”
It’s no surprise Wysada wants to pick the brains of these online retailers. Wayfair, No. 45 in the Internet Retailer Top 500 Guide raised $319 million in an initial public offering of stock earlier this month and in 2013 grew its online sales 54.56% from $592 million to $915 million. One Kings Lane, No. 99, meanwhile grew its 2013 web sales an Internet Retailer-estimated 60% to reach $320 million.
While Wysada is growing, the retailer is cautious. Zu’bi notes the woes of retailers like Fab.com, No. 183 in the Internet Retailer Top 500. At its peak in 2012, Fab.com employed 750 people and was burning through $14 million per month, CEO Jason Goldberg says. Now the design-focused e-commerce business has only 25 U.S. employees and has shifted its focus to a new European e-commerce venture, Hem.com, which focuses specifically on custom, easy-to-assemble furniture, unlike Fab.com, which was juggling thousands of SKUs each day at its peak.
Both Zu’bi and Musleh say they want to learn how to build a long-lasting, sustainable business. E-commerce can be a very fickle business, which can include peaks and valleys, Zu’bi says.
Still, they are optimistic “Home goods is hot,” Zu’bi says. “Even Fab.com is now narrowing to focus in on it.”
Katie Evans
Internet Retailer