eCommerce finance: A simple but holistic template

A year ago, I wrote about how direct-to-consumer companies are disrupting the traditional retail model and how recent shifts in consumer behavior and the supply landscape are set to accelerate the shift in the Middle East region.

Back then, I argued that the democratization of influence (social media) coupled with the decentralization of distribution channels (eCommerce) and the rise of asset-light supply chains (contract manufacturing) made it easier for anyone to set up an online store and sell products online.

In specific, you can easily sell products online by doing taking the following steps:


How to validate your business idea

Jesse Horowitz and Ben Cogan founded Hubble, the first direct-to-consumer contact lens manufacturer in 2016. However, before they did anything meaningful, the cofounders ran two core experiments to validate their idea and confirm that people would actually buy lenses from a newly established company:

  1. They ran Facebook ads on a mock product to test whether they can get enough people to sign up for such a service
  2. They collected emails through Facebook lead ads (more on those later) and followed up with them to see if they would be willing to visit one of their partner optometrists for a lens…


NFTs and the rise of the collaboration economy

In June 2017, Matt Hall and John Watkinson released 10,000 CryptoPunks, a set of tokenized 24x24 pixel art images built on top of Ethereum. Each Punk was unique and could be officially owned by only one person.

Originally free and available for anyone to claim, the value of these tokens (or NFTs) has since exploded and the most expensive one was recently sold for $7.6Mn.

CryptoPunks sales: Top 5

What can you do with a Punk once you’ve bought it? Nothing at all, well beyond bragging that you own one. …


A restaurant’s guide to navigating innovation in the industry

Photo by Nick Fewings on Unsplash

A few weeks ago, I wrote about the food delivery industry, analyzing the economics of food aggregators and how the industry's recent changes could impact its stakeholders.

Last week, I came across a letter from a restaurant owner to a new food aggregator, sharing their pain and asking them to reconsider their acquisition strategy, which prompted me to dig deeper into the impact of food delivery wars on restaurants.

This is the second part of my ‘Food economy’ series, throughout which I plan first to provide an overview of the evolution of food delivery and its economic impact on restaurants


A story of SPACs, PIPEs, and dual-engine flywheels

Last week, Anghami became the first Arab technology company to list on the NASDAQ after merging with a SPAC. As part of the deal, the company is expected to receive anywhere between $40Mn and $210Mn in cash from the SPAC and a separate PIPE investment to help accelerate its growth.

Yes, I also had to reread this paragraph to digest it fully. What’s a SPAC, a PIPE, and why was this deal structured this way instead of the traditional IPO route that most companies undertake when going public?

This piece aims to answer these questions and is split into two…


Overview and predictions for the sector

As the world went into lockdown last year, most people turned to online shopping, which accelerated eCommerce adoption and increased its share of total US retail sales by 75% last year (from 8% penetration in 2019 to 14% in 2020).

Retail giants such as Walmart, Best Buy, and Target saw their market capitalization nearly double in 2020 on the back of enormous eCommerce sales growth. Industries that power the eCommerce ecosystem also heavily benefited from this trend, with companies like FedEx (logistics) and Shopify (eCommerce platform) seeing incredible growth.

In particular, one industry was a significant beneficiary: ‘Buy Now, Pay…


A breakdown of the industry’s dynamics in MENA

Picture from partner.talabat.com

As cities worldwide went into lockdown last March, most businesses were forced to shut their doors and forgo revenues for a few tough weeks. You would think restaurant owners had an easier time, given they worked with food aggregators to power the on-demand food economy. You would be wrong.

Let me explain. Since its inception, the “food economy” hasn’t been good to any of its stakeholders:

  • Restaurants complain of the astronomically high commission rates (up to 30–35%) paid to food aggregators, feeling stuck with no clear alternatives.
  • Customers often complain of inconsistent quality and delays.
  • Food aggregators (and their investors)…


Gymshark, Huda Beauty and the wonders of negative cash conversion cycles

Photo by Omid Armin on Unsplash

Albert Einstein once said, “Compound interest is the eighth wonder of the world. He, who understands it, earns it, and he, who doesn’t, pays it.

In business, a negative cash conversion cycle is the ninth world wonder, enabling companies to grow without the need for external capital.

I have previously explored unit economics in the eCommerce industry and discussed what it takes to make money in the space. In this article, we’ll take a look at the financials of the industry from a different lens: Cash.

Cash is King’ is the most widely used expression in the startup world, given…


Outsourcing distribution is the recipe for disaster

Photo by Kurt Cotoaga on Unsplash

Lord Harold Samuel, a British real estate tycoon, coined the expression: ‘There are three things that matter in real estate: location, location, location.’ In business, it’s distribution, distribution, distribution.

COVID-19 has forced years of digital commerce transformation in a few weeks. As a result, businesses rushed to build new partnerships with demand aggregators and marketplaces to enable online buying. While this was a rational move dedicated to keep customers and generate extra cash, it will quickly turn sideways if business owners are unable to build online capabilities and retake control of their distribution.

The business world is full of stories…


Part 1: Evolution of marketing funnels

Instagram Shop

The most fundamental construct in marketing is ‘the funnel,’ which stipulates that consumers go through four decision phases when making a purchase: They learn about your brand (awareness), they decide they want to explore/ buy your product (intent), they buy the product (purchase), and they return to repurchase it in the future (loyalty)

Amazon, Facebook, and Google built trillion-dollar companies by centering their business models around this funnel, initially focusing on one part, but rapidly expanding to cover other areas, generating 470% (Google), 710% (Facebook), and 1,130% (Amazon) returns for their shareholders over the past eight years.

Imad El Fay

Partner & Venture Builder @HBInvestments | @McKinsey alumn, @Harvard alumn | Nutella lover!

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