Y Combinator has backed African ecommerce fulfillment startups. This year, investors are interested in their niche ecommerce play.
ShipBlu, a summer batch graduate, is the latest to be added to that list. TechCrunch confirmed that it had raised $2.4 Million in seed funding.
Ali Nasser and Ahmed ElKawass founded the company in 2020. The company operates a delivery-and-fulfillment model. It delivers all types of packages to merchants and retailers, from small-scale stores and social media to large-scale fashion retailers that ship thousands of shipments to Egypt and international brands to Egyptian customers.
ShipBlu fulfils merchants' orders by storing their products in warehouses that it leases. It then connects to merchants online and monitors orders through a dashboard. When orders come in ShipBlu picks up and packs them from the warehouse before sending them to customers.
ShipBlu charges per package depending on the destination, size, and speed of shipping.
These three factors are all common in ecommerce and fulfilment. CEO Nasser however stated that shipping speed is not prioritized in Egypt in the same way.
He said that ShipBlu was one of few e-commerce fulfillment companies that offer this service to customers in the country.
We let the merchant make the decision: Should they ship the product overnight and charge or pay the customer for overnight fees? Nasser stated to TechCrunch in an Interview.
Are they open to a cheaper option that will allow them to ship the package within three to five business days? Merchants have the option of offering this option, and they can then offer it to their customers. It could be either the merchants or customers decision.
ShipBlu was launched in August. According to its YC profile ShipBlu signed up more than 40 merchants in its first month. Nasser said that the company has been able to triple its clientele and double its revenues since then. He did not give any hard numbers.
Nasser stated that he hopes ShipBlus infrastructure and network to reach 99% Egyptians within the next few months.
The CEO said that no matter where you live, whether you're in a small town, large city or village, we want to reach you and have the infrastructure to deliver your order to you.
This bold move, which seems a little outlandish considering the timeframe, is inspired by the founders' ambition to transform an industry that has lagged behind other GCC regions, such as Saudi Arabia or the UAE in terms of ecommerce penetration.
The North African country is home to more than 100 million people, compared with Saudi Arabia's 30+ million+ population. Yet Egypt's e-commerce market is only a third that of Saudi Arabia.
This gap is due to the inadequacies of Egypt's infrastructure for e-commerce. Even at the elementary level, zip codes can be inaccurate or nonexistent and pose many challenges for delivery providers or last mile.
Nasser noticed that Egypt's fragmented ecommerce and fulfilment markets were plagued by zip codes when he returned from the USA months before the outbreak.
Online payments exploded worldwide and in Egypt, and after discovering that there was a market for last-mile delivery in MENA at more than $3.1 billion per year, Nasser and ElKawass, his cofounders, teamed up to create ShipBlu.
We realized that delivery services could be improved in terms of the quality and features available. We could offer so much more than what was available in the US or Europe.
Egypt is a completely different market than these more developed countries. The country has a 40% failure rate for deliveries, while the global benchmark is around 8%. Over 150 Egyptian providers face high operating costs due to the high number of deliveries that fail. ShipBlu claims it is differentiating from the market by using AI and ML algorithms in order to reduce costs, meet delivery constraints and refine its operating assumptions.
ShipBlus CEO stated that the company's goal is to allow customers to choose a delivery time of three hours and to know when they can expect their packages. This contrasts with traditional e-commerce fulfillment companies.
The delivery date is not given for 56% of Egypt's online orders. Once you have placed your order, you receive an email confirmation. Then, at random, you will get a call from the agent asking you if you're available to pick up your package. He said that we were changing that.
ShipBlu is competing with Flextock in Egypt and Bosta in Egypt. After the close of the seed round, Flextock became a mutual investor in ShipBlu's Flexport freight and logistics company YC backed back in 2014. This year, the unicorn invested in Sendbox, a Nigerian ecommerce fulfillment startup.
Nama Ventures, a MENA-focused venture capital company, led ShipBlus seed round. Participants included 1984 Ventures; Orange Ventures (the venture capital arm Orange Telecom); Starling Ventures and other VC funds. According to the company, the investment will allow it to expand its coverage and service offerings in Egypt.
