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Arab News
3 days ago
- Business
- Arab News
Rabbit's quick commerce model takes off in Saudi Arabia
RIYADH: Early users of quick commerce company Rabbit in Riyadh are already showing promising signs of engagement, with weekly reorder rates comparable to those in the company's more mature Egyptian market, Arab News has been told. This strong early traction points to a positive product-market fit as the Cairo-based startup expands into Saudi Arabia. Rabbit officially launched operations in the Kingdom in early 2024 and is aiming to replicate its hyper-growth strategy by tailoring its model to each city — starting with Riyadh. 'A more indicative, and exciting, insight is that we are seeing early users in Saudi Arabia already having a reorder rate of around one order a week,' said Ahmad Yousry, co-founder and CEO of Rabbit, in an interview with Arab News. 'This is in line with our much more established customer base in Egypt, which is a compelling sign for us,' he added. Rabbit has already delivered more than 40 million items to 1.4 million users in Egypt, a market that has served as a foundational blueprint. However, the company is taking care not to simply copy and paste its strategies. 'Hence, we adopt a tailored approach, focused on building city-by-city and being highly nimble as a company, which has already proven key,' said Yousry. Within six weeks of launching in Riyadh, Rabbit built a network of dark stores covering half of the city. Its goal is to expand across the remainder of the capital and into additional cities over the next 24 months. Dark stores — also known as micro-fulfillment centers or dark warehouses — are retail or distribution hubs designed exclusively to handle and process online shopping orders. Known for its ultra-fast service, Rabbit is maintaining its performance standards in Saudi Arabia. 'Our goal is to deliver over 94 percent of our orders within the promised time frame,' Yousry said, referring to Rabbit's 20-minute delivery commitment. Rabbit aims to deliver 20 million items in Saudi Arabia by 2026, forecasting exponential — not linear — growth. While the company has not disclosed current delivery volumes or active user numbers in the Kingdom, Yousry emphasized the importance of retention over vanity metrics. 'We focus on methodically growing the number of households that depend on Rabbit on a weekly basis,' he said. A more indicative, and exciting, insight is that we are seeing early users in Saudi Arabia already having a reorder rate of around one order a week. Ahmad Yousry, co-founder and CEO of Rabbit In Egypt, Rabbit recorded 2.5 times year-on-year growth in the first quarter of 2025, highlighting the scalability of its operational model. Yousry cautioned against direct comparisons, saying: 'The unit economics for both markets are quite different. We try not to base our growth strategy on comparative analytics, but rather on adapting the operational learnings from one market to another and building a sustainable business model around them.' According to Yousry, increasing customer numbers and basket sizes are central to sustainable growth. 'There are two fundamental ways to grow the business in a sustainable and organic manner: acquire more customers and, or, increase the basket value per customer. We aim to focus on both of these elements,' he said. A major element of Rabbit's regional strategy is local sourcing. In Egypt, over 60 percent of products are sourced from local suppliers, and the company is pursuing a similar — or higher — ratio in Saudi Arabia. 'In Saudi Arabia, we are currently on track to have even more local brands on the platform,' Yousry said. 'Our partner-first focus, and our commitment to growing local brands and empowering local entrepreneurs, has significantly paid off in Egypt and we expect to see the same in Saudi Arabia.' Beyond fulfillment, Rabbit is prioritizing customer experience, emphasizing both convenience and reliability. 'While speed is incredibly important, to be successful in the e-grocery market, you must also focus on the other key elements of the customer experience: convenience and reliability,' said Yousry. 'Our customers know they can count on us to deliver speed, convenience, and consistency.' Technology, particularly artificial intelligence, plays a critical role in Rabbit's operations. The company is applying AI to enhance inventory management, logistics, and user engagement. 'AI is a fundamental enabler of our operations and future growth in Saudi Arabia,' Yousry said. • Within six weeks of launching in Riyadh, Rabbit built a network of dark stores covering half of the city. Its goal is to expand across the remainder of the capital and into additional cities over the next 24 months. • Rabbit aims to deliver 20 million items in Saudi Arabia by 2026, forecasting exponential — not linear — growth. • Rabbit has already delivered more than 40 million items to 1.4 million users in Egypt, a market that has served as a foundational blueprint. 'We are leveraging AI for sophisticated inventory management to predict demand accurately and minimize stockouts, ensuring product availability for our customers.' Rabbit also uses machine learning to personalize the shopping experience within the app. 'We are utilizing proprietary machine-learning solutions to provide tailored product recommendations and a more engaging shopping experience for our users in the Kingdom,' Yousry added. The decision to launch regionally with Saudi Arabia was driven by the size and structure of its grocery sector. 'The food and grocery market is valued at $60 billion, yet the current online grocery transactions in Saudi Arabia are at a lower rate, sitting at 1.3 percent, than the likes of the UAE and the US,' said Yousry. 'Riyadh is transforming at lightning speed, providing us with the opportunity to meet the shift in customer behavior and demands.' Understanding and adapting to local consumer behavior has been central to Rabbit's entry into the market. 'Consumers in Saudi Arabia prioritize convenience, quality, and new technologies for a seamless shopping experience,' said Yousry. He added that, unlike Egypt — where purchases tend to be daily and need-based — Saudi shopping habits are more occasion-driven. 'In Egypt, the pattern leans more toward daily or impulse-driven purchases, often tied to single packs for immediate needs or smaller households.' Rabbit's mission is closely aligned with Saudi Arabia's Vision 2030, particularly in areas such as digital infrastructure development and support for small and medium enterprises. 'We are helping to accelerate the growth of the digital economy in a growing sector that is yet to reach its digitization potential,' said Yousry, adding: 'We are building and leveraging state-of-the-art technology across our entire supply chain, aligning directly with the Kingdom's vision for a diversified and digitally empowered future in two key sectors: logistics and retail.' Supporting local entrepreneurs remains a central pillar of Rabbit's regional operations. 'Our commitment to local sourcing and partnerships with SMEs provides a platform for these businesses to reach a wider customer base and scale their operations,' he said. 'We hire local and build locally. We pride ourselves on being a hyperlocal company. We are not bringing Rabbit to Saudi Arabia; we are instead building Rabbit Saudi Arabia by Saudi hands.' Looking ahead, Rabbit sees Saudi Arabia not only as a key growth market but also as a launchpad for broader expansion. 'We are very excited for the future of Rabbit in the GCC region,' said Yousry. 'We are already profitable in our first market, Egypt, and we look forward to building on this as we expand,' he stated. 'We see Saudi Arabia as a champion market for the reasons already mentioned. We are focused on growing sustainably and expanding our footprint in the Kingdom, ultimately reaching profitability,' the CEO added.
Forbes
23-05-2025
- Business
- Forbes
After Validation, Before Growth: A Step-By-Step Guide Тo Тhe Efficiency Startup Phase
The startup journey has 4 key phases: Discovery, Validation, Efficiency, and Growth. While ideation ... More and validation get all the attention, the Efficiency Phase — the period after product-market fit and before scaling — is where the foundation for sustainable growth is really laid. Here are the 5 most important steps for handling the efficiency startup phase. The startup journey is often described in four key phases: Discovery, Validation, Efficiency, and Growth. While much attention is given to the early stages of ideation and validation, in our experience managing startups in VisionX Partners, the Efficiency Phase is a critical yet frequently overlooked period. This phase happens after the product-market fit has been found and focuses on refining operations, optimizing unit economics, and preparing the business for scalable growth. To illustrate, if your startup is building cars, in the validation phase, you'd be building the car in the garage and running presales. Then, once you've validated that your car works and that there are prospective buyers, the efficiency phase would be the moment you need to figure out how to produce the car in a scalable way and to employ a business model and pricing that makes the whole venture economically sustainable. 'You want to have a good product to build, but that's basically the easy part. The factory is the hard part." - Elon Musk While this is much easier for digital products and services compared to the manufacturing of a complex product like a car, the efficiency phase is still crucial and vastly underestimated for digital tech startups. Here are 5 basic steps on how to navigate it. Said simply, the efficiency phase is the moment in which the founders need to step away from a lot of the operational work and focus on building scalable teams and processes. This requires capital. In the discovery and validation phase, it's very likely that you'll bootstrap your business. If your idea is a startup, which by definition means it needs to grow fast, it's usually a hindrance to your project if you continue operating with minimal resources. If you are in a financial situation to fund your business on your own, you can continue bootstrapping, but if not, this is the right moment to raise your first round of funding. Professional investors are more likely to engage at this stage, given the reduced risk because of the proof of product-market fit. As operations scale, so does the need for a capable team. Hiring individuals who align with the company's culture and values is vital. A productive culture established during this phase will influence the company's growth trajectory. Besides production, startups should focus on hiring for key roles that directly impact growth, such as sales, marketing, and customer support. Providing clear job descriptions, setting performance expectations, and offering professional development opportunities can help attract and retain top startup talent. Moreover, fostering open communication and collaboration within the team can enhance productivity and morale. A sustainable business model is essential for long-term success. This involves fine-tuning the revenue model, pricing strategies, and cost structures to ensure favorable unit economics. Understanding the Profit and Loss (P&L) statement is crucial, as it provides insights into the business's financial health. Startups should analyze key financial metrics such as Customer Acquisition Cost (CAC), Lifetime Value (LTV), and Gross Margin. For instance, if the CAC is higher than the LTV, the business model may not be sustainable in the long run. Adjusting pricing strategies, exploring new revenue streams, or reducing operational costs can help improve these metrics. This is the heart of the efficiency phase. Even if there is demand for what you do, if you're not able to get the math right, it's going to be hard to survive in the long run. Any growth you invest in would be unsustainable (hence the reason the efficiency phase comes before the growth phase, and why premature scaling could kill your startup). With a validated product and a sustainable business model, the focus shifts to scaling operations. This means replicating successful processes on a larger scale while maintaining quality and efficiency. It's important to identify and address any bottlenecks that may hinder scalability. Implementing standardized processes and leveraging technology can aid in scaling. For example, automating customer onboarding or using customer relationship management (CRM) systems can improve efficiency. Additionally, setting up key performance indicators (KPIs) to monitor operational performance ensures that growth does not compromise service quality. Before entering the growth phase through inorganic growth, it's a good idea to stress-test your business by encouraging organic growth. First of all, this is likely to be cheaper and would show you if you are capable of growing without an artificially high marketing budget. This is important because it would form the basis of your expectations once you start investing in inorganic growth and would educate a lot of the promotional decisions you take. Encouraging existing customers to become brand advocates is the most straightforward way to drive organic growth. Implementing referral programs or other incentives can increase the customer base without significant marketing expenditure. Achieving a K-factor greater than 1 indicates that each customer brings in more than one new customer, fueling exponential growth. For example, Dropbox's referral program, which offered additional storage space for referrals, significantly contributed to its user growth. Startups should identify what incentives resonate with their target audience and design referral programs accordingly. Monitoring the effectiveness of these programs through metrics like referral conversion rates and customer acquisition costs is essential for continuous improvement. Once you've gone through all of these steps, you are generally ready to go into the growth phase. At the end of the efficiency phase, you are basically a healthy, self-sustaining business. The growth phase (usually entered through raising series A and capital and beyond) aims to boost your growth velocity in order to help you capture your market niche as fast as possible, giving you a significant first-mover advantage.
