When Rita Huangzhen left China in 2008 to work for Huawei in Dubai, she had no idea that the emirate would become the place she would get married, have children and start her own business.
Now, more than a decade later, she is the founder and chief operating officer (CEO) of iMile, a last-mile logistics startup that specialises in delivering goods from Chinese e-commerce sites to customers in the Middle East region.
Tell us about your journey so far
Huawei assigned me to this region, it changed my life. I didn’t know anything outside of China when I graduated. I have a technical background in biomedical engineering. I learned how to develop and do business outside of China in a professional way, in a cross-cultural team. Huawei made a lot of mistakes abroad in the beginning like how to pay tax on time, how to work in multi-cultural environment and I experienced that journey.
Then in 2014 Alibaba’s founder Jack Ma came to Dubai when cloud computing was a hot topic. He built a joint venture with Meraas to put Dubai on the cloud and they hired me as the chief technology officer (CTO). I was the one to build the first public cloud computing centre in Dubai with du, Etisalat and the TRA [Telecoms Regulatory Authority]. It took me two years and when I finished that, I saw there was a lot of change in the e-commerce market and I thought maybe it’s time to do something.
How did you start iMile?
I was used to changing my industry, I started in biomedical engineering, then telecoms then the cloud so I thought let me learn about logistics. We started in the Meadows in my villa with three people and the first driver. When we got the first orders, the driver came back at midnight and said “it’s not going to work, no one will take a made-in-China product. No one will pay”.
We were so frustrated, I decided to deliver myself. I did operations, finance, the customer care, spoke to customers on Whatsapp and delivered. I told myself I needed to do everything to understand the industry and the technology. I told customers I’m the CEO of this company, we are a new company. I wanted to see what happened. Sometimes, I brought my daughter with me who would give them the product and they would giver her a dh10 tip. I gained a lot of confidence and I could see how we could do better.
What did you do better?
Initially, I thought operations would make things faster, but after I experienced the whole journey, I found that tech is something that can definitely make real change. So, I got the best talent in China, but they failed because of customer behaviour and driver behaviour here is totally different to China. I make my decisions very fast, so I decided to hire local talent and work with them. After the first year we started being profitable.
We started in the UAE and are now operating in Saudi Arabia and looking at Kuwait and Egypt. We will move our call centre to Egypt next month.
How does the Chinese market compare to here?
Compared to China, the e-commerce market here is still very small. In China, the penetration of e-commerce is at its maximum now and the volume is still increasing by 30 per cent because the frequency of buying has changed. You can even buy ice cream online in China. Efficiency here is low, in China, one delivery associate can deliver 100 to 200 orders a day. Everything is prepaid and you don’t need the customer to be home to deliver. Density is low here, you have to check the shipment, collect the money, efficiency is very low here.
But the local market is changing, for big players like Amazon and Noon, they are getting more prepaid orders. When Alibaba started, nobody had tried e-commerce, the service level was not stable and no one trusted it. It was the initial phase of all e-commerce, now in China, slowly slowly it became 100 per cent prepaid.
What about the issue of cash on delivery (COD)?
In this region, last mile is related to COD which is something that is very difficult. Most companies will use customer COD for cashflow, so we collect the money on behalf of the e-commerce companies and we remit it back to the seller in less than seven days. Others take longer.
What are the other challenges in last mile?
When we look at the market, last mile always follows the same trend as e-commerce. We have seen this happen in India and China. E-commerce cannot grow without supporting logistics players. Last mile is business to consumer, so the cost is very high. There is very solid cost on people, operations, warehousing, vehicles and technology. Many people cannot make this balance. The volume is not enough that is why the cost is not going down. Efficiency is not high enough, so the cost is always high. We have been observing all of this which is why we have been investing in technology to bring down the cost and improve efficiency and have better customer experience.
Our market is very small so it is very difficult to generate income, anybody on the street can buy a bike and go do deliveries, but we ulitise a lot of tech so you can crowdsource, there will be drivers like Uber or Careem and you are able to see how many drivers there are in your area, when the system generates an order, the drivers who are free can pitch to get that order.
What will your industry look like in the next few years?
Although the market is struggling, in the end there will be a few players to survive. We have two to three years until we reach two or three players. They will survive because some of them may be strong in certain parts. They may have certain connection with e-commerce companies or volume. Whoever has the volume will be able to survive. We do next-day delivery with local players, I don’t think the one-hour delivery is the service that the market requires, the majority is still low-cost and better customer experience for next-day delivery. So the key is to bring the volume up and reduce the cost.