Note: photo submitted by Agzakhana, credit: Batool Al Daawi
Late last week, Agzakhana, Egypt’s first online pharmacy, announced a new round of funding from Vodafone Ventures, made for an undisclosed amount in exchange for 22.22% of the company.
“We first saw the promise in Agzakhana when they competed in Google’s yearly competition, Ebda2. They've got an interesting business model, and they've already made a million pounds in annual turnover,” Mohammed Al-Ayouti, Vodafone xone’s Senior Manager, told Wamda.
Against the backdrop of Egypt’s current political turmoil, “It's very important for us to prove to the investment community that Egypt is open for business,” says Al-Ayouti. Vodafone also generally sees healthcare as a critical segment, he says; the telecommunications company has also partnered with several pharma companies to develop on a few mHealth initiatives around the globe.
Not that securing funding was easy, says Agzakhana founder Ahmed Shabana, who founded the company along with his co-founder and brother, Sherif Shabana, in 2008. “We’re very vertical and very niche, and healthcare in general is a very hard segment to raise capital in, in Egypt,” he says. “But we’re lucky to have a very direct model."
The company works with several local pharmacies, including “one of Egypt’s biggest chains,” to list their inventory online, allow customers to shop, and then have orders delivered from the nearest location. When customers order items from multiple pharmacies, Agzakhana uses Aramex to retrieve and deliver items.
For this reason, sales have, in fact, gone up recently. “Maybe
with the crises, people feel safer, and traffic has been crazy, so
perhaps they feel it's smarter to not go to the actual pharmacy,”
Shabana himself has built the platform from the ground up, working “a lot of jobs”- including stints at GlaxoSmithKline and AstraZeneca, and consulting gigs for Orascom and a medical imaging company based in San Diego- to finance the startup.
A pharmacist who hails from a family of pharmacists, he saw the need to go online. “I saw an opportunity to transform the physical pharmacies of my family into an online pharmacy. I thought, it's the right time, and I had the right resources. I really have a passion for technology,” he explains.
Today, the site monetizes via ads, and by working as a sales channel for large retailers like Nestle and Reckitt Benckiser, advertising on Google AdWords to direct people to their products on Agzakhana.
The site typically sees a 2-5% conversion rate; now that Google Adwords has verified and enabled the site to advertise as an online pharmacy, he expects to see rates improve further.
Next, Agzakhana plans to develop a POS technology for pharmacies that will enable better communication and inventory tracking. "We're planning on partnering with as many medium pharmacies as we can," says Shabana, offering the stores a Vodafone internet package bundled with the technology.
Shabana also hopes to eventually expand outside of Egypt: "We're researching which markets have the least restrictions while having similar customer needs."
Improvements at Vodafone
Earlier this year, Vodafone Ventures came under some criticism from members of the Egyptian community, for being slow with releasing investments to its first round startups. This process has dramatically improved, says Al-Ayouti.
“We had some challenges in the beginning, stemming from the complexity of launching a VC, and especially due to difficulties dealing with the government,” he says.
In the meantime, Vodafone did everything it could to offer loans to entrepreneurs to bridge the waiting period, and to improve the process. “We’ve learned a lot in the last 10 months about how we can do things better; we’ve learned the best approach to government red tape, and judging by the feedback from our recent investments, I believe we're on track.”
A new development revealing how Vodafone has boosted its efficiency will be announced soon, he says. “We love and support our entrepreneurs, and never want the process [of receiving funding] to be tough on them.”