Make money from your baggage allowance
In an ever-expanding universe, there is no room for a mindset of scarcity. Disruptive new businesses are being bought for billions. Barely a decade ago, these would have found it hard to even get seed funding. Ring just got bought for a billion dollars. It was rejected by Shark Tank not so long ago. Agility and the ability to stay clear of preconceived notions is essential. Amazon, the quintessential etailer, has bought into brick-and-mortar retail in June 2017. It seemed counter-intuitive but the stock price has almost doubled since then. Inspired by the behemoth, thousands of innovative micro and small businesses are starting up on the back of Instagram, Snapchat and native mobile applications.
Background
There is a huge opportunity for innovation in the logistics industry relating to cross-border e-tailing. The current model is a carry over from the postal system. The mindset is centred around centralisation of warehousing, sorting as well as a distribution model based on hub-and-spoke. The end-user experience can be much improved. Delivery scheduling is inconvenient. The care taken, especially for fragile items, leaves much to be desired. There is also the sense of risk associated with non-delivery of the items ordered.
An example of disruption of the centralised approach is the ride-sharing and car-hailing app industry. It has unlocked significant value by decentralising resources, creating one-onone experiences, sharing assets and creating income streams for individuals by fixing a broken, archaic centralised chainof-command taxi system.
Cross-border e-tailing is a subset of the typical retail spend of an economy. According to a January 2018 report from Deloitte, the size of retail sales is about 26 per cent of the economy or about $780 billion. Of this about 2 per cent or between $1.5 billion to $2 billion is the spend on cross border e-commerce in the region. (eMarketer).
The unfulfilled need
High-costs of cross-border shipping are a deterrent. Plus all the factors described earlier — namely, delivery scheduling, handling and reliability. Another big challenge is the question of trust. Very often, there is no recourse when purchases are made from sellers on marketplace e-commerce platforms. For good reason or foul, sellers may not honour the commitment to ship. So it’s not unusual for shoppers to turn to their own community of friends and relatives travelling abroad to shop and bring back specific items. Sports goods, medication, fashion, hobby material, food — every inbound flight carries in promises that traditional e-commerce is unable to effectively fulfill. But what if this behaviour could be translated into a business proposition. One that works on both sides of the supply and demand equation?
The company
Airshoppers (www.airshoppers.com) is building a community or a peer-to-peer marketplace that matches resident UAE buyers with travellers. It digitises the community experience of asking friends, acquaintances and relatives to bring back that special shirt, that unattainable pair of tennis shoes or that just-right herbal moisturiser.
So just how does it work? Says CEO and founder, Habib Sassi, “It’s all about building trust and a sense of community for buyers and shoppers. Our community of Airshoppers list the product that they, as buyers, want via the marketplace website or mobile app. They state the amount that they are willing to pay. Other members of the community, offer their services as bespoke shoppers and shippers when they travel abroad.”
Tapping into the need for transparency and trust, Airshoppers provides an Escrow-based payment mechanism. This ensures that buyers and shoppers are protected and there is an inbuilt arbitration mechanism to mitigate some of the common challenges with business-as-usual e-commerce. Also, in a shared economy, trust is built on the foundation of algorithms that track past behaviour and ratings, allowing for buyers and shoppers to collaborate without really knowing each other.
Habib discovered another opportunity. When he started the company, he personally aggregated all buyer requests. He realised that people that he was sending the requests to were very happy to make alternate recommendations or provide a native view of what is really interesting about the market. This adds to the feeling of community, of getting an insider’s view of what is truly special to source from the shopper’s market. According to Habib, buyers are often inspired by the requests and posts of others thereby finding something new or better to purchase. His point of view is that by creating what he calls “an aspirational and inspirational shopping platform,” buyers and shoppers will find personal and social reasons to become Airshoppers. In any app, bespoke content is what makes a valuation difference.
The numbers
Habib, in his mid-thirties, is an experienced former banker. This drives his focus on numbers.
Airshoppers keeps a 7 per cent commission on each transaction. Typically, shoppers take a premium of between 10 to 20 per cent on the value of the items purchased. It is a simple model that can easily be understood and implemented. Habib sees opportunities through merchant and courier partnerships as well as affiliate marketing programmes.
He believes that Airshoppers is well placed to tap into an estimated current level of 20 million cross-border transactions. A DHL report indicates that this volume will grow to $300 billion by 2020. Over a 100 million passengers visit or transit through the UAE in a year. The under-utilised capacity of these travellers is more than adequate to serve the 2.7 million cross-border buyers in the market. According to him, this model is easily expandable across regions and even globally.