At simply 26, Waiz Rahim is meant to be concerned within the household enterprise, having returned house in 2016 with an engineering diploma from the University of Southern California. Instead, the younger entrepreneur is plotting to construct the Amazon of Bangladesh.
Deligram, Rahim’s imaginative and prescient of what e-commerce seems like in Bangladesh, a rustic of almost 180 million, is making progress, having taken inspiration from a spread of established tech giants worldwide, together with Amazon, Alibaba and Go-Jek in Indonesia.
It’s a far cry from the household enterprise. That’s Rahimafrooz, a 65-year-old conglomerate that is likely one of the largest corporations in Bangladesh. It began out targeted on battery manufacturing, however through the years its companies have branched out to span energy and power and automotive merchandise whereas it operates a retail superstore known as Agora.
During his time in school within the U.S., Rahim labored for the corporate as a tech advisor while determining what he needed to do after commencement. Little may he have imagined that, fast-forward to 2019, he’d be in command of his personal startup that has scaled to 2 cities and raised $3 million from traders, one in every of which is Rahimafrooz.
Deligram CEO Waiz Rahim [Image via Deligram]“My options after college were to stay in U.S. and do product management or analyst roles,” Rahim informed TechSwitch in a current interview. “But I visited rural areas while back in Bangladesh and realized that when you live in a city, it’s easy to exist in a bubble.”
So fairly than keep in America or go to the household enterprise, Rahim determined to pursue his imaginative and prescient to construct “a technology company on the wave of rising economic growth, digitization and a vibrant young population.”
The teenager’s ambition was formed by a stint working for Amazon at its Carlsbad warehouse in California as a part of the ultimate yr of his diploma. That proved to be eye-opening, however it was really a Kickstarter undertaking with a good friend that actually opened his thoughts to the potential of constructing a brand new enterprise.
Rahim assisted fellow USC classmate Sam Mazumdar with Y Athletics, which raised greater than $600,000 from the crowdsourcing web site to develop “odor-resistant” sports activities apparel that used silver throughout the cloth to repel the odor of sweat. The enterprise has since expanded to cowl underwear and socks, and it put Rahim’s thoughts to work on what he may do by himself.
“It blew my mind that you can build a brand from scratch,” he stated. “If you are good at product design and branding, you could connect to a manufacturer, raise money from backers and get it to market.”
On his return to Bangladesh, he obtained Deligram off the bottom in January 2017, though it didn’t open its doorways to retailers and shoppers till March 2018.
E-commerce by native shops
Deligram is an effort to emulate the achievements of Amazon within the U.S. and Alibaba in China. Both corporations pioneered on-line commerce and turned the web into a serious channel for gross sales, however the younger Bangladeshi startup’s early strategy may be very completely different from the way in which these now hundred-billion-dollar corporations obtained began.
Offline retail is the norm in Bangladesh and, with that, it’s the lengthy chain of mother and pop shops that account for almost all of spending.
That’s notably true exterior of city areas, the place such native shops virtually grow to be group gathering factors, the place neighbors, associates and households run into one another and socialize.
Instead of disruption, working with what’s a part of the social cloth is extra logical. Thus, Deligram has taken a hybrid strategy that marries its common e-commerce web site and app with offline retail by mother and pop shops, that are often known as “mudir dokan” in Bangladesh’s Bengali language.
A buyer can order their product by the Deligram app on their telephone and have it delivered to their house or workplace, however a extra common — and oftentimes logical — possibility is to have it despatched to the native mudir dokan retailer, the place it may be collected at any time. But past merely taking deliveries, mudir dokans may also function as Deligram retailers by promoting by an agent mannequin.
That’s to say that they permit their prospects to order merchandise by Deligram even when they don’t have the app, or perhaps a smartphone — though the latter is more and more unlikely with smartphone possession booming. Deligram is proactively recruiting mudir dokan companions to behave as brokers. It offers them with a pill and a bodily catalog that their prospects can use to order through the e-commerce service. Delivery is then taken on the retailer, making it straightforward to choose up, and sustaining the native community.
“We’ll tell them: ‘Right now, you offer a few hundred products, now you have access to 15,000,’ ” the Deligram CEO stated.
Indeed, Rahim sees this new digital storefront as a key driver of income for mudir dokan homeowners. For Deligram, it’s probably additionally a serious buyer acquisition channel, notably amongst those that are new to the web and the world of smartphone apps.
This offline-online mannequin — identified by the often-buzzy business time period “omnichannel” — isn’t new, however in a world the place apps and messaging is prevalent, reaching and retaining customers is difficult, notably in rising markets.
“It’s not easy to direct people to a website today, and the app-first approach has made it hard,” Rahim stated. “We looked at how companies in Indonesia and India overcame these challenges.”
In explicit, he studied the work of Go-Jek in Indonesia, which makes use of an agent mannequin to push its companies to nascent web customers, and Amazon India, which leans closely on India’s native “kirana” shops for orders and deliveries.
In Deligram’s case, the mudir dokan picks up gross sales fee in addition to cash for each supply that’s despatched to their retailer. Home deliveries are attainable, however the lack of native infrastructure — “turn right at the blue house, left at the white one, and my place is third from the left,” is a typical kind of route — makes discovering actual places troublesome and inefficient, so an extra price is charged for such requests.
E-commerce startups typically wrestle with last-mile as a result of they depend on a clutch of logistics corporations to meet orders. In a uncommon transfer for an early-stage firm, Deligram has opted to run its whole logistics course of in-house. That clearly necessitates price and sure offers important rising pains and stress, however, in the long run, Rahim is betting deal with high quality management pays out by larger customer support and repeat consumers.
A potential Deligram buyer flips by a tough copy of the corporate’s product brochure in a neighborhood retailer [Image via Deligram]
Startups on the rise in Bangladesh
Rahim’s timing is impeccable. He returned to Bangladesh simply as know-how was starting to point out the potential to influence each day life. Bangladesh has posted a 7% rise in GDP yearly yearly since 2016, and with an estimated 80 million web customers, it has the fifth-largest on-line inhabitants on the planet.
“We are riding on a lot of macro trends; we’re among the top five based on GDP growth and have the world’s eighth-largest population,” Rahim informed TechSwitch. “There are 11 million people in middle income — that’s growing — and our country has 90 million people aged under 30.”
“An index to track the growth of young people would be [capital city] Dhaka… you can just see the vibrancy with young people using smartphones,” he added.
That’s a perfect storm for startups, and the nation has seen a mixture of abroad entrants and native ventures choose up velocity. Alibaba final yr acquired Daraz, the Rocket Internet-founded e-commerce service that covers Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal, whereas the Chinese big additionally snapped up 20% of bKash, a fintech enterprise began from Brac Bank as a part of the regional enlargement of its Ant Financial affiliate.
Uber, too, is current, however it’s up towards powerful native opposition, as is the norm in Asian markets.
That’s as a result of Bangladesh’s most distinguished native startups are in ride-hailing. Pathao raised greater than $10 million in a funding spherical that closed final yr and was led by Go-Jek, the Indonesia-based ride-hailing agency valued at greater than $9 billion that’s backed by the likes of Tencent and Google. Pathao is reportedly on observe to lift a $50 million Series B this yr, in accordance with Deal Street Asia.
Pathao is one in every of two native corporations that competes alongside Uber in Bangladesh [Image via Pathao]Its chief rival is Shohoz, a startup that started in ticketing however expanded to rides and companies on-demand. Shohoz raised $15 million in a spherical led by Singapore’s Golden Gate Ventures, which was introduced final yr.
Deligram has additionally pulled in spectacular funding numbers, too.
The startup introduced a $2.5 million Series A elevate on the finish of March, which Rahim wrote got here from “a network of institutional and angel investors;” such is the problem of discovering a big test for a tech play in Bangladesh. The traders concerned included Skycatcher, Everblue Management and Microsoft government Sonia Bashir Kabir. A delighted Rahim additionally gained a test from Rahimafrooz, the household enterprise.
That’s not a given, he stated, admitting that his household did initially need him to go to work with their enterprise fairly than pursuing his personal startup. In that context, contributing to the spherical is a serious endorsement, he stated.
Rahimafrooz might be an important ally in future fundraising, too. Despite an bettering local weather for tech corporations, Bangladesh’s high startups are nonetheless discovering it powerful to lift cash, particularly with abroad traders that may write the bigger checks which can be required to scale.
“I think the biggest challenge is branding. Every time I speak with new investors, I have to start by explaining where Bangladesh is, or the national metrics, not even our business,” Pathao CEO Hussain Elius informed TechSwitch.
“There’s a legacy issue. Bangladesh seems like a country which floods all the time and the garment sector going down — that’s a part of the story but not the full story. It’s also an incredible country that’s growing despite those challenges,” he added.
Pathao is reportedly on observe to lift a $50 million Series B this yr, in accordance with Deal Street Asia. Elius didn’t deal with that immediately, however he did admit that elevating development funding is a much bigger problem than seed-based financing, the place the Bangladesh authorities helps with its personal fund and entrepreneurial applications.
“It’s hard for us as we’re the first ones out there, but it’ll be easier for the ones who’ll follow on,” he defined.
Still, there are some optimistic abroad watchers.
“We remain enthusiastic about the rapidly expanding set of opportunities in Bangladesh,” stated Hian Goh, founding associate of Singapore-based VC agency Openspace — which invested in Pathao.
“The country continues to be one of the fastest-growing economies in the world, underpinned by additional growth in its garments manufacturing sector. This has blossomed into an expanding middle class with very active consumption behavior,” Goh added.
With the ache of fundraising put to the facet for now, the brand new cash is being put to work rising the Deligram enterprise and its community into extra elements of Bangladesh, and the tougher city areas.
Geographically, the service is increasing its agent attain into 5 extra cities to provide it a complete of seven places nationwide. That necessitates a rise in logistics and operations to maintain up with, and put together for, that new demand.
Deligram employees in one of many firm’s warehouses [Image via Deligram]Rahim stated the corporate had dealt with 12,000 orders so far as of the tip of March, however that has now grown previous 20,000 indicating that order volumes are rising. He declined to offer monetary figures, however stated that the corporate is on observe to extend its month-to-month GMV quantity by six-fold by the tip of this yr. Electronics, telephones and equipment are amongst its hottest gadgets, however Deligram additionally sells attire, each day gadgets and extra.
Interestingly, and maybe counter to assumptions, Deligram began in rural areas, the place Rahim noticed there was much less competitors but in addition probably extra to study by a extra early-adopter buyer base. That’s clearly one main problem with regards to development, and now the corporate is city enlargement factors.
On the product facet, Deligram is within the early levels of piloting shopper financing utilizing its native retailer brokers because the interface, whereas Rahim teased “exciting IOT R&D projects” that he stated are within the starting stage.
Ultimately, nevertheless, he concedes that the highway is more likely to be an extended one.
“Over the last 18-20 years, modern retail hasn’t made much progress here,” Rahim stated. “It accounts for around 2.5% of total retail, e-commerce is below 1% and the long tail local stores are the rest.”
“People will eventually shift, but I think it’ll take five to eight years, which is why we provide the convenience via mom and pop shops,” he added.
Update 05/22 03:00 PDT: Corrected particulars about Rahimafrooz