Dubai-based e-commerce firm says IPO "not off the table"
Online retailer Namshi eyes expansion in Egypt next year
Online fashion retailer Namshi is eyeing expansion in Egypt next year to reach young, tech-savvy shoppers in the Arab world's most populous country as the economy shows signs of recovery.
Namshi, which is majority owned by Dubai's Emaar Malls, is considering setting up operations in the African nation to cater to an under-served market, Hosam Arab, chief executive of Namshi, told reporters in Dubai on Monday. Plans are still in early stages but would require opening local warehouses to avoid cross-border logistical challenges.
"It's a market where we believe demand exists and the customer is under-served," Mr Arab said. "It's the young, lifestyle customer that's looking for affordable fashion, branded fashion and follows social media personalities."
Egypt's e-commerce market is set to grow 33 per cent to $3 billion (Dh11bn) by 2022 from $0.7bn in 2017, according to a study commissioned by Google and conducted by Bain & Co. released on Monday. Rising internet use and a wider selection of products from new and existing regional players will help drive market growth, the report said. Methods of paying online and delivery logistics are also improving. The GCC and Egypt account for 80 per cent of the e-commerce market in the Mena region.
Namshi is also interested in more markets in North Africa but needs further more clarity on consumer spending habits, disposable incomes and stability in those economies.
"North Africa would probably be secondary after Egypt," he said. "We need to get more comfortable with those elements before those markets become attractive."
The potential expansion into the North African country comes as Saudi Arabia, the biggest e-commerce market in the region, becomes a "highly hyper-competitive" market, Mr Arab said.
Entering the Egyptian market comes with the challenges of understanding consumer spending habits and the brands that would sell well.
"It's still a potentially quite a challenging market with a lot of questions unanswered, but we do see the opportunity in that the consumer is under-served similar to the UAE market in past," he said, saying the size of investment is yet undetermined.
Namshi, in which Emaar Malls bought a 51 per cent stake last year, is also open to the idea of taking the company public under the right circumstances, according to Mr Arab.
"It's not off the table," he said. "If the timing is right, if we see that the market is right for it and we're ready for it, then absolutely there's no reason why we wouldn't."
Mr Arab declined to provide a forecast for Namshi's earnings in 2018 but said its business in the UAE has been growing at "very healthy" figures, though value-added tax introduced earlier this year has cut revenues by five per cent.