Market Overview:
Globally, online grocery has grown rapidly. Credit Suisse estimates the market will grow to $285B by 2020. USA and Europe have seen several successful e-grocery start-ups, who have benefited immensely from the fulfilment infrastructure and delivery strategies that emerged from the success of Ecommerce. With examples like Ocado in UK valued at $5B and InstaCart in US valued at $7,6B, Online grocery today is where e-Commerce was 5-10 years ago. Grocery market in Saudi Arabia, UAE, and Egypt alone is estimated to be an $83B market. As for Saudi Arabia in specific, it’s a large consumer market with retail as one of the largest sectors of the economy and Grocery is the second-largest expenditure of a Saudi household. While estimates are scarcely available, local financial group SAMBA estimates private consumption by itself accounts for 41.5% of GDP in KSA.
Nana, the product:
Nana started as a dedicated online grocery store targeting the youth demographics and quickly evolved into the largest online grocery marketplace in the Region. Nana, currently serving 14 cities across the Kingdom, follows a marketplace business model by empowering hypermarkets to list and sell their products to millions of Nana users. The online service connects consumers to a network of in-store shoppers who prepare the basket and hand it to the scheduled delivery driver through Nana’s fleet network. Meanwhile, end consumers can follow the progress of their orders journey from placing it up until it is delivered.
Nana has tripled its turnover during the past year and partnered with Carrefour, Panda, SPAR, Farm Superstores, Manuel and many others allowing the platform to offer the widest possible range of consumer-packaged goods (CPG) all over Saudi.
Notably, Nana wasn’t always the platform that it is now. The working business model today is a result of the team’s experiments and trials in the market, starting with a simple question they asked back in 2015, “How can we easily share our shopping list with family members?”, Taking into consideration the huge FMCG sector and variety of products, solving that riddle would require the team to venture into listings in order to serve their clients. Which in turn led Nana to address the steps of purchasing and delivery and finally lock the end-user experience and complete the circle of their customer’s journey under one platform.
Perhaps the most important change of all was the latest shift that Nana went through in 2019 from an e-commerce model (Online Supermarket) to a marketplace model. In both 2017 and 2018.
while Nana was still under the e-commerce model (online supermarket), the team achieved a lot, demonstrated the need of the local market for an online competitor in the food sector, developed an unparalleled technical infrastructure, and built a name and reputation with consumers. Whoever, expansion under the e-commerce model is costly and in most cases reduces the speed and agility of a startup’s growth. Achieving notable growth under this model means high operational expenses and heavy injections on dark Stores, permits, and staff. On the long run, it is difficult for a Nana-sized technology startup to compete huge players in the value chain while maintaining similar prices to those offered by traditional supermarkets.
Hence, mid 2019, the management team at Nana decided to fully transform into an online marketplace offering traditional supermarkets and food centers an online channel and act as a lead generation engine. This shift in model changed the game for Nana, Instead of positioning itself as a direct competitor, Nana became a success partner and a leader in generating sales for offline players, which in turn contributed to accelerating the growth of Nana during the past year, and positioned the startup to become the first platform in Saudi Arabia to include major food market chains on one platform.
COVID-19 effects:
With the current economic circumstances taken into consideration and the spread of Coronavirus, Nana plays a major role in helping individuals to adhere to precautionary measures of self quarantine. Nana’s capacity was tripled compared to the previous month in order to meet the increasing demand which was also doubled. Using incentive programs such as Ajeer program sponsored by the Ministry of Human Resources and Social Development, temporary secondment of employees contributed to facilitating the process of Nana’s accelerated growth in light of this crisis.
The Team Behind the Success:
Nana was founded by three founding members Sami Alhelwah, Ahmad Alsamani and Bakr Elsherif. The team was later joined by Abdulmajeed Alsukhan, Nana’s co-founder and CFO. Sami is a serial tech entrepreneur with a long list of startup adventures over the course of 16 years in the ecosystem. Bakr, co-founder and CTO, is a software engineer and helped Sami in developing several products in the past. Ahmd, co-founder, specializes in hardware design and stands behind many hardware tools that enable Nana’s workflow. Finally, they all decided to focus on growing Nana in 2016 and that is when they attracted a few angel investors to fund their idea. In late 2017, the team came across Abdulmajeed Alsukhan, an energetic entrepreneur who started a last mile logistics startup, Hably, the four entrepreneurs have immediately decided to join the forces. That was when Nana acquired Hably and Abdulmajeed joined Nana as a co-founder. Abdulmajeed’s contribution to the team was instrumental in managing the logistics operations more efficiently and more importantly, in fundraising.
Investment Rounds:
Starting with their first round back in May 2016, Nana team raised a $2.1m Seed round by Angel investors, followed by a $2.2m Convertible Note round in 2017. Both rounds were to further help Nana better solidify its position in the market and to expand to multiple cities across the Kingdom. With a better understanding of where Nana stands and where its headed, Nana raised its $6.6m Series A round in 2019. The round was co-led by Impact46 and MEVP, with participation from Watar Partners, Wamda Capital, and Saudi Venture Company (SVC) with the objective to double-down on growth, expansion and improving its customer service.
“Impact46 started engaging with Nana in late 2018, around the time we were setting up shop ourselves and had underwrote $5m of Series A round in March 2019, before we even had our own license ready. We are happy to have done so, because it opened the doors for us to set up our own Growth Fund and differentiated us from our competitors. The decision to move to a marketplace model in 2019 was a gutsy call by the management and proved to be very successful when it was implemented. We had doubts, but we had faith in the founders” said Abdulaziz Al Omran, Partner at Impact46.
This past month, Nana announced its $18m Series B round to further drive its growth, along with the plans to expand its geographical footprints into different countries in the region. The round was led by STV, the largest VC in the Middle East with a $500m fund, and with participation from Impact46, Wamda Capital, MEVP, Watar Partners, and Saudi Venture Company (SVC). Except for STV, all participants of this round have been previous investors in Nana Series A round, which only signifies the energy and momentum built by the Nana team. Homegrown from the ground up, marks the start of a new breed of startups in Saudi Arabia.
