E-Commerce in Egypt – The Tipping Point: Episode 1

Stakeholders (1)

Episode 1: Identifying the stakeholders & controlling forces

Being at the heart of the E-Commerce scene in Egypt and while working on the preparations for robusta’s upcoming E-Commerce Summit 2018 (contact me if you’re interested in participation) I can’t help but keep asking myself what’s left till the market reaches its tipping point in Egypt. Inspite of having one of the highest social media penetration rates in the world with more than 33 million users on Facebook alone massive increase starting 2011 and between 2014 to 2017,  E-Commerce in Egypt hasn’t reached anywhere near the global E-Commerce growth rates for the obvious reasons like, for starters, the fact that the Egyptian customer is still hanging on having to see and feel the product they’re buying to make sure it’s good and being afraid to use their credit cards online and fearing their goods won’t be shipped (aka Egyptians have trust issues).

Being half engineer and half consultant, I couldn’t help but tackle this from a merely analytical perspective and run a quick mostly qualitative assessment of both the market stakeholders and controlling forces through a series of upcoming blog posts in an attempt to at least present the problem and try to find practical solutions and get you, the customer, the business owner, the rising entrepreneur, the big brand and anyone who believes, like me and everyone at robusta, that there’s a great future and opportunities yet to be snatched in the business of E-Commerce in Egypt, to weigh on this matter and give each other pieces of our mind, turning this from the thoughts of one individual to a discussion among those who are concerned and who knows what else. For starters, Identifying the stakeholders is mostly straight forward; however, identifying the controlling forces can get a little bit tricky.

Out of our experience at robusta for the past 4 years with several E-Commerce implementations, some of which are true models for successful case studies, I believe the most critical mix to look at of stakeholders and forces would be:

  1. Supply: that would be the retailers and product providers. Think B.TECH.
  2. Demand: that would be the end consumers. That’s everyone of us, the end users.
  3. Mediators: in some cases there’s a marketplace acting as a mediator bridging the supply & demand. Think Souq, Jumia, Edfa3ly, etc..
  4. Technology: that comes at the core and probably the key contributor to E-Commerce over the traditional brick-and-mortar retail and distribution.
  5. Logistics: though a key pillar of traditional retail, E-Commerce adds an additional layer of complexity to optimize on cost and meet customers’ expectations.
  6. Customer Service: in a global world that truly brings international E-Commerce players as close to local consumers as local players, customers expectations have truly hit the roof
  7. Marketing: between the classical 4Ps and the need to go almost fully digital, marketing becomes one of the key barriers to new entrants to the market to realize the full potential of the market
  8. People: most analysis would overlook the role of knowledgeable workers, management capacities and small business owners setting and E-Commerce strategies and respective implementations.

In the following series, I will look at each of the aforementioned and attempt to do an assessment of the current status of each in an attempt to look at the missing jigsaw pieces and anticipate the moment in time where they all click and unleash a huge potential of an economy on its own that can be a critical driver for economic development as it does not only develop the retail business but obviously creates lots of jobs on the logistics, customer service and significantly contributes to the development of the technology and financial sectors.

Would love to get thoughts on this as I plan to break it down into a series of detailed analysis of each of the aforementioned and I’m quite flexible to adjust for a more inclusive perspective that’s hopefully one step forwards towards the market tipping point.

I believe other perspectives looking at the topic could also be quite enlightening, one of which would be the study of the evolution in other more developed markets and the different phases it has gone through until it reached maturity.

Top 10 Reasons Why We Quit Social Media

Now that we’re in Ramadan, the prime time for advertising, media and communication, it reminded me of why we’ve come to consciously and intentionally shut down our social media operations only a little bit less than 1 year ago. Back then, we had an amazing team of creatives and a bunch of notable accounts yet we still decided to cut it off and, since then, chatting with other agencies about social media only feels relieving and reassuring.

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I feel socially obliged to share it with my fellow entrepreneurs out there to either save them precious years of their lives or inspire them to come up with their own recipe of success.

We’re not so impulsive here at robusta nor do we follow the crowd. We have exhausted all analysis before finally deciding social media is not for us. Here are 10 reasons why.

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  1. Barriers… What barriers? I can’t see no barriers!

Everybody knows that a market with a high entry barrier for competition is a market that’s more secure and sustainable and as the barrier becomes lower it quickly becomes a red ocean where only the lower price wins. In the social media ground, your grandma can start her own social media agency, today, right from her comfy couch, and compete with you tomorrow on that Culinary Workshops account. No?

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  1. Fresh Blood.. You’re Bloody

Now that everyone already knows there’s a social media agency around every corner and a social media freelancer in every family, you become easy to replace. Clients will always feel empowered, tempted and encouraged to ditch you and try something new. Even if you’ve done a good job, at some point it’s always time for fresh blood. Your agency will probably exhaust its creative concepts for the client in the first couple of campaigns and just as you’re recharging your creative energies for the next campaign, your client will seek out to other agencies knocking their door to listen to new pitches, lower prices and once this starts they will find every reason to ditch you and find their next prey.

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  1. Pricing

Social media account management market prices are somewhere between EGP 4K to EGP 12K for at least 80% of local accounts. This should supposedly pay for team’s salaries (designers, copywriters, community managers, creatives, media and account manager), indirect salaries to keep your agency running and expenses such as your rent & utilities and make a worth-it-enough profit. That’s probably one reason why agency owners turn out to be so mean to their people, pay them peanuts, delay their salaries or even skip it at all or they reach out to deep pockets to finance the show and keep their star accounts alive and rocking, despite losing.

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  1. It’s not really social media, it’s a game of PR

Social media on its own is really not an offering; however, PR is. If you’re into PR with its different practices from Events to Press to Media Relations etc… social media can be an essential complementary service. If you’re only doing social media, you’re as good as gone.

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  1. You’re either friends with the “influencers” or you’re screwed

In a country like Egypt, social media is driven by shepherds, commonly known as social media influencers. They would tell the people what to like, what to eat and where to go, and you’re either friends with them (you can buy it at $9.99 in low seasons and as high as $99,999 in higher seasons) or you can struggle to speak in the vacuum

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  1. Ads

Your agency is being paid peanuts that can’t even cover your costs and then your competitors come up with that creative pitch and bottom low pricing. How can they do that? Ads. Most of the agencies lose on their social media fees and make “profits” out of the ads business. Ads, being a slightly more technically involved business, are almost not audited by the clients. But even that has a price war to the extent that you find agencies claiming to run ads for 5% management fees aka out of a 100K campaign over 3 months (which is a relatively well-funded campaign), they charge 5K which is less than 2K a month. WTF? 2K to finance the ads manager, designs, optimization, reporting and account management? You guys are either losing or you’re just taking a cut out of the 100K behind the client’s back and poor clients barely understand 20% of what the agency wants them to understand about their ads.

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  1. Social Media is not steroids, say that to your client!

Clients expect social media campaign today – tomorrow I’m the most popular on Facebook or nothing. Clients want to have their say on the design, the copy writing, posting frequency & posting times and on the claim of company policy and then you’re held accountable for results.

They expect every post to be a campaign on its own. While it’s understood that every now and then a campaign to shake things up is a nice thing but it’s just unfair to expect. They compare a post to a TV commercial that takes shit loads of money, time & team to produce and has a lifetime that could extend anywhere between 1 to 6 months. They expect a post to drive sales, directly, all the time.Moreover, clients don’t want to spend enough on ads to make social media work and they’re not even educated about the difference between a social media post and the lifetime of a post.

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  1. Payments & Cash flow

Knowing how contracts work around Egypt, a wise agency needs to have its own collection strategy that keep its cash flow near healthy and know for sure this has to be a mixture of relations, politics, red eye and knowing where and when to stop the tap. With social media, you have to keep the show running for the account day in and day out if you want to stay in it. Regardless of your payments status, you have to always be a giver and your client will almost always find a reason to delay your payments, and poor you having to keep their show running regardless or just lose it at all.

Big change begins with small steps

  1. The illusion of growth

80% if not more of the social media agencies are either unethical in the ways they make money (see: ads) or they’re chasing after the illusion that they’re now incurring losses to build their portfolio and once they strike the right balance, they’re on the way to endless profits. This is just bullshit.

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  1. You don’t really have a strategy & the model is immature

You need to be joker of all trades.. and yes you will be master of none. The game between a company’s marketing team, creative agency and production agency is just not that mature, yet.

Few last words…

We see it as an integral part of the communication and requires lots of customer service and alignment on day in & day out business operations so better done in house. If you want to survive you need to focus on the niche. It’s collaborative team work. It will not work without a PR who takes care of events coverage.

If you want to survive you need to do it 1. a-la-a call center style, 2. creatively and find your niche (like Kijami) and 3. complement it with a powerful barrier (own your own media channels like MO4).

We told you what’s going wrong with social media. Here’s a list of social media agencies worth considering who’re good at what they do and can tell you what’s good about it.

  • Unplugged: Good, passionate & ethical people
  • Mental Media: Young and progressive
  • MO4: Dirty as the media game can get. F&B and Nightlife freaks
  • Kijami: Truly grabbing the essence of social media
  • Nineteen84 Management: I had to have a list of 5 because 4 seems to be odd

To Infinity and Beyond

 

Arguably, one of the movies’ most famous catchwords, and despite the fact that my number 1 early-morning activity with my 3-year-old has recently been watching and reciting Toy Story at 7am on a weekend with one eye open and the other half-asleep, this post plays to a more serious note about an organization’s own journey of self-exploration…

2015 was a particularly interesting year for robusta particularly because, for a change, we rethought our strategy, structure and, believe it or not, our robustivity vision, too!

Lots of concerns have triggered such exercise. It was mostly about the pursuit of profitability, sustainability, scalability and where we see robusta in 5 years from now. It was quite regular of a discussion between the managing partners to question the scalability of robusta and if it’s ever a candidate for exceptional growth that fulfills ours and the team’s aspirations for humongous growth. Don’t get me wrong! robusta was doing quite well already but we’ve always seen robusta not as a boutique agency but rather a flagship empire and been questioning a lot the way to get there.

Inspired by Gallup’s Strengths Finder and our IGNITE Development Program designed and implemented by our good friends at Mirqah ( more on this in upcoming episodes), we decided to start our pursuit by identifying and playing to our organizational strengths.

Cutting a long story of several client meetings (more of disguised interviews), internal workshops and self-reflections, it was becoming clearer that our top 3 strengths were our solid development skills and portfolio, a strong and influential culture fueled by an exceptionally competent team and robusta’s brand equity, reputation and reach within diverse verticals. Our weaknesses have always been lack of clarity to what we aspire to become that translated into stretching ourselves too thin across several streams which eventually lead to subpar profitability.

Building on this understanding, we made some bold decisions of exiting some of our service offerings and accounts. We’ve completely abandoned Branding, Social Media, Microsoft-based technologies, and trivial/low potential tickets. The reasons why we stopped each are quite interesting and each deserves a blog post on its own. We naturally decided to focus on our leading services which are E-Commerce, Mobile, Websites and Web Apps.

We also turned around our perspective looking at our team and decided to get rid of the illusion of growth that comes with growing our headcount after figuring out this is, in most cases, nothing but a sign of lack of efficiency. Comes next naturally is an overpowering need to look after productivity and a sharply pruned work force that makes it easier to invest in our culture & human capital development.

Ironically, we’ve also figured out that there’s such a HUGE local market that we need to dominate first before crawling beyond borders. Last but not least, we’ve done what turned out to be a pretty good job standardizing and innovating our retainer-based project development/support packages.

The said resolutions automatically put us on track with total clarity on how to go about restructuring the organization to achieve what became our solid vision.

“To serve as a flagship of national economy and become one of the top listed EGX companies by 2030”

This also fits perfectly with our designated 4-fold mission towards our clients, our people, shareholders and the community.

Finally, what we’ve mostly learned the hard way is that although focus seems to be an obvious strategic recommendation for any organization, it takes a lot of wisdom and learning about your customers, competitors, team and, of course, yourself to really be able to tell what focus means and how it applies to your organization.