Inside Hmall's plans to scale
Moving from a 150m2 office to a 750m2 office is every startup’s dream. For Hmizate, it’s a dream come true.
Earlier this month, the Moroccan company behind market place Hmall, daily deals website Hmizate, and online travel agency Vayago, moved into their new offices in the Belvédère neighborhood of Casablanca. Offices are on the 6th floor. The warehouse is on the street level.
This is not the only move for the company. After a year of rapid growth – Hmall’s revenues grew 300 percent in 2014 – the startup has been busy restructuring its teams and launching its own delivery fleet. And it finally entered the mobile market in 2015, an important milestone for an independent Moroccan startup.
This impressive growth is the fruit of patience. In 2013, after two years of existence, Hmizate raised USD $1.6 million from Belgian VC Hummingbird (a true love story), which allowed it to increase its advertising budget and their human resources. With more hands on deck, the team increased the number of products offered online – they have now 40,000 products, eight times as many as last year, and as many as their Rocket Internet competitor Jumia. They are now more easily able to satisfy increasing customer demands, and improve customer service, said CEO Kamal Reggad to Wamda.
“Before customer service would close at 5 pm, and we’d lose lots of sales,” he continues. Now, the 20 employees working at the in-house call center work up until 6:15 pm.
“The Moroccan market is still in an e-commerce education phase,” Reggad noted. “We have to explain how it works, to be there with them step by step. Sometimes, they know how it works but they’d rather have someone on the phone for the first time; it comforts them.”
It’s costly, but necessary, he continued. “It’s the beginning of e-commerce in Morocco; we have to show that we’re here if there’s any problem.” To that end, the team goes all in. A company phone number is on each page of the website, and various other means of communication, such as email, chat, and even WhatsApp, are offered too. Clearly, this focus on customer service is something that has worked for Hmizate, and it seems to be working for Jumia as well.
This wouldn’t have been possible without raising money, admits the entrepreneur. “It’s impossible to survive without raising funds in this sector, especially when you’re competing with a foreign company with deep pockets.”
In Hmall's new offices
Staff increase, end of flat hierarchy
Up until recently, the company was proud to say it was a flat organization with zero managers. But this became difficult to sustain as the company scaled. “With 50 employees, it became harder to communicate, and onboard new recruits,” Reggad said. “For the first time, we have managers, but we’re still a flat organization.”
A flat organization with managers?
Managers, he answers, are not there to give orders. They are there to help with communication between departments.
Scaling doesn’t mean you know everything
To meet the growing demand, the company needed to rethink its entire logistics.
It has restructured and grown its “fulfillment center,” a warehouse where teams receive products from suppliers, pack them, and dispatch them to their recipients. It hired former DHL staff to start their own fleet called Hexpress to deliver in Casablanca, Rabat, Marrakech, and Tangiers.
“Delivery is an extension of customer service,” believes Reggad. “We want the clients to see the delivery person wearing a Hmall t-shirt. We want to be flexible, to be able to ship during the weekend, after work hours and do express deliveries, etc.”
And while the company may be four years old, it sees itself as a brand new startup when it comes to launching a new service. “We’re in pilot phase, we’re trying to understand how to handle delivery to maximize delivery per delivery agents,” the CEO added.
The struggle against returns
Delivery is not the only area the company is experimenting with. Reducing the rate of returns is another area that needs improvement. Orders are returned for two reasons: an unclear postal address that makes it impossible to deliver, and customers, empowered by cash-on-delivery payment options, who opt to cancel their orders.
To prevent this, customer service calls clients after receiving an order, to confirm the order and check the address, and again before delivery. Delivery agents still have to call clients when trying to deliver an order if they can’t find the address.
“It’s a heavy process, but we’re adapting,” Reggad said. “We’re working on the technology to automate things.” The team has developed, for instance, a tool to save the addresses of recurring clients more efficiently.
The company has tried to ditch cash-on-delivery but to no avail. CoD is one of those things that companies need to be willing to invest in to build trust and the e-commerce in Morocco. Today, 70 percent of all orders are paid on CoD. It might seem huge, but it’s nothing compared to the 90 percent of CoD of the early days, and this is mostly thanks to a loyalty program that enticed customers to pay with credit card.
It may seem crazy for a website of its size, but up until five weeks ago, Hmall didn’t have a mobile-optimized website nor an app. Now, mobile orders account for 20 percent of the total number of orders. It’s easy to understand why all the founder “can think about at the moment is mobile.”
With all those new projects, can the company overtake Jumia? Maybe, maybe not, but it’s getting closer to its goal: becoming the Rakuten of Morocco, by offering a wide variety of products on its e-commerce website.
As for breaking even? “For now, we focus on growth, maybe in two to three years,” hints the entrepreneur.
Photo : Hmall
You might also want to read: