Udroppy sees opportunity in MENA where cash-on-delivery is still prevalent for online purchases that create challenges for sellers.
Although credit cards are the most common method of online payments in the MENA region, old habits die hard and many consumers still prefer cash-on-delivery (COD), even when it costs extra, said Nicolò Augusto Manica, CRO and co-founder of Udroppy, a software-as-a-service enabled B2B marketplace for wholesalers and online resellers.
This method of payment causes challenges for merchants in terms of logistics, especially when it comes to handling returns. Udroppy has found an opportunity for its software which connects merchants to suppliers remotely and handles all aspects of supply chain management.
“E-commerce in the region is growing very fast. Saudi Arabia is a huge market, but it has some challenges including a reliance on cash on delivery which is complicated for a small e-commerce company,” said Manica.
“This is a problem we are familiar with from serving the Mediterranean region where cash-on-delivery is big as well. I think it is related to the culture and also generational – growing up my parents would warn me about sharing my credit card details online. There are countries that don’t trust using credit cards online and are willing to pay a bit extra for COD options,” he continued.
A 2020 report indicated that credit cards were the common payment method for online transactions across MENA; COD followed as the second most common, accounting for 16.4 percent of transactions.
Udroppy recently opened an office Dubai and intends to significantly increase its operations in the region, with Manica calling it a “main market for the upcoming years. We have a lot of clients here in the UAE already and we believe in the MENA region.”
From its regional base in Dubai’s JLT area, Udroppy plans to expand to Saudi Arabia next, as it’s the region’s biggest economy (followed by the UAE).
Looking outside the Gulf, Udroppy is turning its attention to Africa.
“Cash on delivery is very prevalent in North Africa and we will expand by building partnerships with logistics centres in North Africa, like Morocco, and then eventually connect merchants who want to sell in Morocco by using our platform as well,” explained Manica.
“The main constant for us is to democratise the access to e-commerce through borderless commerce so being able to sell whatever you want from one platform without the hassle of having to visit the country and finding a local partner. We do this ourselves and give you the access to these resources and technologies,” he continued.
Founded by thee childhood friends from Italy in 2018, Udroppy addresses the “nightmare” of supply chain management in running an e-commerce business and was born out their personal experience.
“Sitting together one day, we started thinking of how there’s a software to create an e-commerce store and to do marketing but no software for supply chain management,” said Manica.
“So we thought of a one-step solution where an e-commerce business could easily set-up its supply chain through a platform that connects it with suppliers, warehouse, and logistics centres. You can basically run your business from behind your computer,” he continued.
Udroppy was self-funded at first because “we knew this project was going to work out and we wanted to have skin in the game as well,” explained Carlo Bellati, CEO and co-founder of Udroppy.
At the end of 2018, the start-up raised $700,000 from an angel investor who also ran a family office. This was followed by a pre-series A funding round for which Udroppy set up its company headquarters to Silicon Valley and raised $800,000 through its participation in Launch, an accelerator programme run by Jason Calacanis, a serial entrepreneur and angel investor.
“Our main priority was to follow someone who has been there and done that already, instead of getting advice from someone who has not launched successful start-ups, and Jason exactly fit that profile. Over the three months of the programme, we would pitch to 20 investors on a weekly basis,” explained Bellati.
“So by the end of the program, you would have met with two hundred plus investors so you build that network of investors which would have been really difficult to build for foreign founders like us. After the programme, it was very easy to stay connected with these investors and so after we reached several milestones of revenue it was easy to raise capital from them and then eventually raise capital in the future,” he continued.
Having a strong network of investors is especially important in the Middle East where “everything is based on connections meaning that it is important to go around, meet people and establish relationships. Let others know you by your knowledge and vision,” said Manica.
Udroppy will be using the funds to fuel its expansion in the MENA region and to redesign its user experience, said Bellati.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
