Can e-commerce site Cazamoda overcome the challenges of family business?

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As a market for e-commerce builds in the region, many offline retailers are considering going online to launch their own e-commerce websites. One of the newest is Cazamoda, a fashion retail site, launched by Reach International, a retail and media company that has been supplying other e-commerce sites, such as, MarkaVIP, and Desado, for several years.

This year, Abeer Lizzaik, the daughter of Reach International founders, decided that the company should offer its own retail site, and launched Cazamoda with family funds to serve the Gulf market. Reach International will still supply other sites, but less so than in the past, she says.  

Thus far, Cazamoda's most popular products are watches, abayas and women accessories, she says, and the majority (60%) of its subscribers are women, with the majority of demand coming from the UAE and Saudi Arabia.   

What sets it apart? 

All of the major fashion e-commerce sites feature offers on clothing, accessories, shoes, watches, and devices, and most have taken on tens of millions of dollars in funding to date, to hone their products and delivery experience. So what will draw shoppers to Cazamoda? 

Lizzaik is counting on even better customer service than that of her competitors. “We believe that this region lacks a five star online experience to meet the right expectations of the market and customer’s cultural understandings,” she says.

With this new project, she's trying to avoid the mistakes that other e-commerce sites make, such as allowing larger orders to be placed even if inventory is not sufficient, she explains.

To gain a competitive edge, Lizzaik is working with couriers SkyNet, DHL and FedEx to ensure that all shipments get delivered to the UAE within 24 hours and within the rest of the GCC within three working days. She's confident that quick delivery times will set Cazamoda apart, and yet, her competitors have also worked to bring their logistics in-house to also do exactly that. Namshi, the Dubai-based e-commerce website backed by Rocket internet, began improving same day delivery after its latest round of US$13 million in investment. MarkaVIP, after signing a deal with PayPal, has also reduced return rates by using its own fleet for last mile delivery in the UAE and Saudi Arabia; Souq as well does its own delivery in several markets.

In order to cut down on high return rates, Cazamoda is also limiting the option of paying via cash-on-delivery (COD) to the UAE. She offers customers the ability to pay via credit card, pay for cash-on-delivery ahead of time, or pay via mobile, through PayFort. Yet by only offering PayFort's COD service in the UAE, won't Cazamoda lose out to competitors in markets such as Saudi Arabia, where COD rates have been known to approach 70-80%? 

“Since we are a small team, we don’t want to face logistical problems [that come with COD],” Lizzaik explains. “We want to keep it professional and avoid any issues with the customers.” For the moment, it's clear that the team is trying to avoid COD headaches, and yet, if they want to take the Saudi market seriously, they will have to think about turning on COD eventually. 

Another competitive edge Lizzaik believes Cazamoda has is accuracy. “We give accurate information about each product,” she says, explaining that all images are managed in-house. “Customers get exactly what they see.”

However, I failed to understand how this would set the platform apart. I worked in e-commerce for two years and one of the golden rules in this field is that platforms should deliver to the customer exactly what is portrayed on the platform. Every major fashion e-commerce portal in the region also manages many of their own images.

Bootstrapping or simply not having any other option?   

After building up around 16,000 subscribers, it's clear that Cazamoda is taking things step by step, leveraging its initial round of funding, and not spending heavily on marketing.

“Competition is very high, and other e-commerce sites are spending like crazy. As a fresh startup, we don’t think that spending a lot is healthy,” says Lizzaik.

However, Cazamoda is also motivated to see its competitors succeed, as it directly benefits from the supply deals that Reach International has with other e-commerce portals; that revenue is funneled directly into Cazamoda. A statement of slow growth is also perhaps a bit contradictory for a startup that jumped from three to 28 employees in one year.       

Yet for now, Lizzaik is planning on a cautious model; the team will continually improve the site, but only seek more funding to add new features once the site gains more traction in the market.

Part of that caution is driven by the fact that the company has taken on family investment, Lizzaik says. 

“Family investment limits you, and you need to be very cautious, every penny counts,” said Lizzaik. “They [family members] expect things to go faster, things to work, we always discuss Cazamoda on dinner tables, everyone in the family talks about it and tries to help, and the biggest challenge is proving that [the startup] will be successful.” 

Not to mention that this sort of family pressure can affect managers’ ability to focus on what’s important. “I would have preferred if it weren’t self-funded because there’s a lot of pressure. We were using a lot of internal resources, it was a good thing but not the best thing at all”, concluded Lizzaik.

Although Cazamoda won't seek more family funding, it seems that, for now, its team is attempting to avoid taking risks, whether logistically, or with marketing, to gain customers. It's appropriate that they're perfecting the platform and gaining more customers before proceeding, but in a fiece e-commerce sector, Cazamoda may need to step up rapidly to keep up with the competition. Maybe getting ready to pitch for a round external funding will help them break loose. 

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