Before the switch to Fintech and crypto related startups around 2015, most Venture Capital firms focused on the Internet side of things (not just IoT).
Oasis500, Wamda and Silicon Badia started the trend in early 2010s: if any new startup wanted to get funding, all it had to do is sell anything online; it was the boom of online stores. If you wanted to sell fashion, just do it online and create a dedicated website for it. You want to sell musical instruments, falafel, stationary, event tickets or any product you would think of, or is difficult to reach, just create a website and you would surely get funded.
The trend is still continuing with the recent funding of Eyewa1
What was attractive for VCs is the drop shipping type of business model:
This means a startup will only run an online store and simply connect the product seller to the buyers. The startup will keep no inventory or stock (cut costs on warehousing and labour) and will simply ensure that the product is shipped from the original product seller to the customer.
The only asset a drop shipping company has is its own brand: is it a reliable website? Are customers satisfied with their services? Is the online store well known in the market? Are the products listed up to date? Etc. Etc.
This brings us to one of the first drop shipping companies in the region: Jamalon.
Jamalon: Vacuous Dreams
The Good
Jamalon was one of the first success stores and stories in the region launching in October of 2010. The region was suffering through a dry spell in the publishing industry. Few were writing, few were selling and even fewer were reading (and that is despite having the entire Arab civilisation and culture based on reading the Holy Book). This was made famous in Beirut’s International Bookfair in 2000 when one Lebanese publisher erected a mock grave and tombstone and wrote on it: “The Arab Reader is dead”.2
Jamalon brought hope to the region at that time.
The company was even funded and backed by the biggest shipping company in the Middle East, with Aramex owning 7.49%. so the dream was born of connecting the remotest reader and enable to get their hands on any book they wanted.
Source: Aramex Investor Relations
Jamalon even started a Print on Demand service to quickly bring the books to local markets. Things were looking good.
The Bad
According to industry experts and insiders, Jamalon reached its credit limit with a lot of local publishers in 2018, having outstanding dues with a lot of them. Some complained to the Publisher’s association in the region and it was only in the last funding round3 that most of them got paid. Other insiders claimed that Jamalon was selling books at a loss (some compared it to Uber’s strategy to price dumping to secure market share).
And despite having the backing of Aramex, the company seems to be having a lot of issues with shipping books. A quick glance through customer reviews online confirm this.
One insider confirmed that the Print on Demand service has also stopped.
The Ugly
According to an article on Entrepreneur magazine, Jamalon’s founder started his official entry into books by illegally posting an unofficial translation of Harry Potter’s book4 . Copyright wasn’t much of a thing at that time but this wouldn’t boast well with publishers that wanted to partner with the company for Jamalon’s Print on Demand service (copyright and royalty due to authors and creators is such a big topic that one person put it well: if every radio station paid its dues to Fairuz for playing her songs every morning, she would be the richest person on Earth).
Despite its patchy start and moving away from electronic books (e-books), 2 local competitions came in: Abjjad and Wajeez and they are catching up quick!
The other scary part for Jamalon’s future is having another 2 competitors in the market: Noon and Amazon (through its recent acquisition of Souq5).
Knowing Amazon’s massive fire power behind it, Jamalon is going to have a hard time fighting such a giant in the book selling business.
Compared to Amazon which also started as an online bookseller, Jamalon is still light years away to becoming a giant.
Amazon was first launched in 1994 and 10 years down the road and a successful IPO, it made revenues of $7 billion (and a profit). In 2020, Amazon made $386 billion in revenue.
10 years after its founding, Jamalon is still a startup that looks like it is begging for funds just to cover its own expenses.
https://www.menabytes.com/eyewa-series-b/
https://www.chronicle.com/article/the-arabic-publishing-scene-is-a-desert-critics-say/
https://www.wamda.com/2019/03/jamalon-raises-10-million-series-b
https://www.entrepreneur.com/article/286368
https://techcrunch.com/2017/07/03/amazon-souq-com-completed/