IN launching ShopCash, its new online shopping cashback and deal discovery app for Middle East consumers, Wego wants to ride on the coat-tails of the soaring instant cashback e-commerce culture that got further accelerated during Covid and give investors another reason to back its future growth.
In South-east Asia it’s never been better to be a consumer with merchants, from restaurants to spas to fashion, offering vouchers, cash, points – you name it, they have it – in the name of incentivising customers to transact. It is a crowded space – in Asia, the leading brand is ShopBack, which is said to have driven sales of US$1b this year and received a US$75m funding round from Temasek in March but there are plenty of local and regional players snapping at their heels.
The Middle East market is wide open, according to Ross Veitch, CEO and co-founder of Wego, and it’s hoping its first mover advantage in a new space will give it wings at a time when those of travel wings has been clipped. It also gives investors another reason to back the company which, when travel takes off, will have both engines revving.
“It’s another good story for investors,” he said. “Like a lot of travel companies, we did a somewhat unplanned capital raise due to Covid. We had been profitable for a couple of years but our rainy day fund didn’t extend to 99% drop in business for four months.
“We are through that now and we see tremendous amount of value being created in these cashback models and we are in a pretty good position to do that across the Middle East.”
Veitch said that inbound investor interest has picked up since “vaccine trials came back so positive and public markets have rebounded. Travel stocks are trading up”.
“Like every other company with a degree of visibility, we have received inbound interest from investors and are having interesting conversations about going public earlier than originally intended.”
E-commerce in GCC valued at $24b
To be run independently, both brands will be tightly integrated so that ShopCash users will have access to Wego’s travel content and vice versa, with ShopCash forming the back of Wego’s loyalty programme.
“It’s a question of execution,” said Veitch. “Our advantage is we already have 30m app downloads and a brand base and merchants recognize that doing it with an established company makes sense.”
Executing on the ground is Mamoun Hmedan, managing director, MENA and India, Wego, who said, “Nobody in the Middle East has done much travelling over the last year but because of social distancing measures we are all spending more time and money online than ever before. It’s been a tough year for many, and we know how gratifying it is to get something back. ShopCash gives you real money back into your account for the online purchases that you make. For every brand, for every deal, even on top of the merchant’s discount, so basically it’s a deal on another deal.”
ShopCash users will earn instant cashback for online purchases and gain access to exclusive deals and discounts. Cashback accumulates in a user’s ShopCash wallet and can periodically be withdrawn into a user’s bank account or via other pay-out methods. ShopCash users will also be able to redeem cashback for air tickets and hotel stays with Wego or for purchases or gift cards with other partner merchants.
According to a recent study by Kearney, the GCC e-commerce market value in 2020 had reached $24 billion. A 2019 Google and Bain and Company study had pegged the value of MENA’s e-commerce market at $8.3 billion. The study reported that in 2017, e-commerce penetration of total retail sales in MENA averaged 1.9%, with the GCC at 3% and UAE, the most advanced market, at 4.2%.
This means plenty of headroom for growth given that the study projected e-commerce penetration to hit 50% of global retail sales by 2020.
Craig Hewett, Wego co-founder, reported good response from merchants. “Everybody from global e-commerce giants to regional champions to local niche specialists have immediately seen the value of participating in ShopCash and I’m pleased to say that we have a long back-log of merchants to integrate in the weeks and months ahead.”
In terms of product, it’s taken inspiration from “the cashback shopping rewards pioneers in other parts of the world including Rakuten (4755:JP), Paypal’s Honey (PYPL:US), ShopBack, Dosh and Cashrewards (CRW:AU)”, said Kaushal Pilikuli, Product Director for ShopCash.
“We’ve adapted the model for shoppers and merchants in the Middle East region starting with the largest e-commerce markets of KSA and UAE, but we plan to quickly expand the service into Kuwait, Oman, Qatar, Bahrain, Egypt and across the rest of the MENA region. In the pipeline we have lots of new merchants, new payout methods, new deal types, new redemption methods and a long list of exciting new features.”
Not giving up on travel, signs of new stirrings in the Middle East
Said Veitch, “It’s quite exciting to be working in a completely new vertical with new players and dynamics.”
Technically, the two models have similar plumbing, he said. “It’s about funneling demand to merchants who compensate us with commissions for bookings generated”
What’s different is, ShopCash is a simpler model. “In online travel, everything’s real time, pricing changes, availability and that increases complexity. With online shopping, you have catalogues – prices do change but not as dynamically as in online travel.”
That’s not to say Veitch has given up on travel. “It’s beginning to come back in the Middle East, we are 25% of revenues and bookings compared to a year ago. The positive vaccine research and rollout makes me confident that towards the end of 2021, we will be back to where we were end of 2019.”
Dubai recently launched an appeal for digital nomads to come work in Dubai for a year “to live and work near the sea” with the added bonus that all residents of the UAE receive a Covid-19 vaccination.
“Dubai and some other destinations are smart to specifically target the digital nomads and professional workers with the flexibility to work from anywhere. This is beneficial to an economy to have professionals who can support themselves, not taking jobs from locals and injecting cash into the economy.”
• All images credit: Wego
