We are delighted to announce our investment in Bosta, a Cairo-based courier logistics startup revolutionizing the last-mile parcel delivery space across MENA and broader Africa. Plug and Play Ventures is participating in their Series A-1 fundraising alongside Silicon Badia, 4DX Ventures, and other notable regional investors.
Delivery: the entry point and the grand barrier for many small businesses and merchants in MENA.
Challenges related to the speed and cost of product delivery in MENA have hindered the development of e-commerce. In the UAE, Egypt, and KSA, the estimated average cost of package delivery is more than three times the global best practice for similar delivery times. With higher rates of returns and failed deliveries (five times the global best practice), COD (Collect On Delivery)-based deliveries are estimated to be twice as expensive as prepaid orders.
Postal services, the backbone of e-commerce delivery operations in most developed markets, are generally underdeveloped in MENA. Most global couriers, such as FedEx and DHL, do not offer COD, limiting delivery options to regional and local players. This has affected the speed and cost-effectiveness of last-mile delivery, putting pressure on large regional multicategory e-commerce players to build their own last-mile delivery infrastructure.
Examples of this are Souq’s QExpress, which has grown to become one of the largest delivery players in the region. Other examples include Noon, which has also been building its last-mile delivery infrastructure and now employs more than 1,000 drivers across 20 cities.
There has never been a better time to be and invest in e-commerce in MENA
The Egyptian market has huge potential: it has more than 100 million consumers who are fastly adopting digital consumer-focused technology and unlocking the forthcoming e-commerce boom. The e-commerce market size in MENA is expected to reach ~ $30 Billion in market size by the end of 2021 - it was previously estimated to reach $28.5 billion by 2022, and the pandemic has tremendously accelerated this trend. The region’s digitally-savvy consumers are hungry for a broader online product selection and new shopping experiences. E-commerce is at the core of retailers’ strategies, and pure players are expanding into new markets and product categories. The different elements of the e-commerce ecosystem—namely, payments and logistics—have come a long way despite the many remaining challenges.
While Aramex remains the leading cross-regional logistics player, new local logistics players have mushroomed across markets, offering third-party delivery services. Inspired by Alibaba’s Cainiao, there is an opportunity to create a virtual regional logistics platform that would connect the different local delivery players to a cloud-based network that optimizes (time and cost) parcel delivery between sellers and buyers. It would also allow for an efficient handover of parcels among delivery players, especially for cross-border shipments.
Bosta is taking on the challenge by providing businesses with next-day delivery, handling exchange shipments, customer returns, and cash collection. The company doesn’t own the fleet or have any salaried drivers. Instead, Bosta uses an Uber-like asset-light model with all the drivers on its network being freelancers who earn money for every completed parcel delivery.
Bosta’s vision is to become a centralized platform that uses delivery as the main channel to acquire new customers and to offer new products and services to its clients.
The Team Behind Bosta
The team is well-posed to tackle such a big challenge: Plug and Play is partnering with a top-notch team with a great vision for this endeavor. Bosta’s Senior team is composed of different members offering a strong operational and technical background (Careem, Lynks, Cequens, HSBC, etc.) with international experience and a proven track record in the Egyptian market.
Bosta’s CEO Mohamed Ezzat was the COO of Lynks, a Plug and Play and YC '16-backed portfolio company, and we’re super hyped to partner with him again.
Plug and Play Ventures is thrilled to partner with Bosta as they build the e-commerce delivery platform of the future.
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