Online store clicks with Arab world

When Ahmed Alkhatib wants to check on the customers who flock to his shop every day, he simply has to look at a computer screen on his desk. Without leaving his office in central Amman, he can see what products they are scouting for, where they are located, what language they operate in and even what browser they are using to check out his offering.

Most importantly, he can see how much money they are spending on Gucci sunglasses, Prada handbags and other products sold on MarkaVIP, one of the largest online shopping sites catering exclusively to the Arab world.

Launched less than two years ago, the site became an instant success and today continues to attract customers and dollars at a furious pace. "We have 2 million members, and are adding 5,000 to 10,000 every day," says Mr. Alkhatib, the company's 34-year-old founder and chief executive. "Over 250,000 people visit our website every day – that is more than all the malls in the Middle East can bring in one day."

The site embraces the "flash sale" concept, offering special deals on a specific line of goods for a limited period of time. The offering changes every day, and typically includes branded clothes, shoes, handbags, watches, jewellery and sunglasses, but also home decor items.

At first glance, it seems surprising that one of the first successful Arab online shopping sites was established as late as November 2010 – long after companies such as Amazon.com Inc. and eBay Inc. became household names across the world. But, as Mr. Alkhatib explains, any Arab e-commerce venture faces a series of obstacles that are unknown in the United States and Europe. "I looked at the Arab world as one contiguous region – but it isn't. Every country has its own regulations, every government has its own method and style."

This complex web of differing customs, tax and border regimes – even between neighbouring countries – makes shipping goods prohibitively expensive. This in turn makes it harder for e-commerce companies to compete on price with traditional brick-and-mortar retailers, if they can get the product to the customer in the first place.

But the problems did not end there. "The payment infrastructure doesn't exist," Mr Alkhatib says. "Many people don't have credit cards, and many of those who do don't trust giving their credit card details to a browser."

The solutions to all these problems were simple, but hugely cumbersome to implement: unlike other e-commerce companies, MarkaVIP ships the bulk of its products itself, maintaining a fleet of cars and drivers in all its core markets. To get around the poor payment infrastructure, it allows customers to pay in cash on delivery. And to avoid complicated cross-border transactions, the company set up subsidiaries and distribution centres in every country that it operates in – from Lebanon and Jordan to Saudi Arabia and Qatar.

"I looked at all these things as an opportunity," says Mr. Alkhatib, who spent 15 years working for a variety of start-ups and technology companies in California before returning to Jordan. In his view, the bigger the obstacles faced by a start-up, the harder it will be for future competitors to replicate its success. "If I set up a business, I don't want it to be easily cloned," he argues. "For any business trying to replicate what we did just on the logistics side would take them two years minimum."

Mr. Alkhatib is reluctant to discuss financial details, but says the company is "very much on the path to profitability." In April alone, he says, MarkaVIP recorded sales worth $6-million (U.S.). He and other members of the management team own 30 per cent of the company, with the rest held by investment funds that have so far put about $20-million into the company.

For all the growth that MarkaVIP has experienced already, Mr. Alkhatib is determined to expand the brand even further. Part of his 360-strong team is currently busy setting up a French-language version of the site, in a bid to capture the francophone North African market. Egypt, the biggest Arab market by far, is another obvious target. The company is also determined to expand the website's product offering, for example by selling cars and even real estate on the MarkaVIP platform.

"We haven't scratched the surface yet. We have 2 million members and we are still largely unknown," says Mr. Alkhatib. His ultimate goal is clear: "I want [the site] to become a household name, and I want to become the biggest e-commerce brand in the Middle East."