Jordan’s Wheels Express Closes Despite Steady Customers: Did it Scale Too Quickly?
In May 2011, Wheels Express was a rising star in Jordan. It graduated from Oasis500 and was one of the first companies to secure funding from the incubator's investment arm, Oasis500 Ventures 1.
Angel investors Imad Malhas and Karim Kawar also invested in the online ordering and delivery services, which quickly built up a loyal userbase.
Yet just over a year later, co-founder Ibrahim Manna has announced the company’s closure. What happened?
Crucially, it may have come down to their desire to “grow fast or go home,” as Manna says on a call. “I believe that if we had been able to open in Dubai, Jeddah, Riyadh, or even Beirut, it might have been a different story. Amman was always a testing ground; we just didn’t get that next round of investment to reach the next stage.”
In the beginning, the company reached profitability quickly, bringing customers onboard by offering a variety of services. “We were trying to crack two problems at once,” says Manna, “getting people to order online, while offering a better logistics solution than we typically have in Amman.”
Convenience was the name of the game- customers could order from over 90 local restaurants, have laundry service picked up, have groceries, prepaid cards, calling cards, and even shisha delivered to their homes within the hour for most items or, at most, same day.
The site built up to 4,000+ customers, becoming profitable by charging only a 2 JD (US $2.80) delivery fee and taking a 10-30% commission from vendors. In the early days, the founders themselves delivered items (“I’ve personally delivered over 1000 orders,” Manna says), but they quickly built a reliable delivery team with a technological solution that could dispatch orders to drivers based on proximity.
Having initially proven the model in Amman, the Wheels Express team decided to grow quickly. “We wanted to prove to investors that we could scale,” says Manna.
Yet scaling with a delivery model meant hiring many more employees and leasing a larger office. “We quickly transitioned back into simply breaking even,” says Manna; he speculates that this drop in margin may have scared off investors.
Perhaps if he had scaled by opening a separate office, it might have been a more compelling sell, but logistics-heavy businesses in new markets are tough. “When there are no people on the ground, it’s much faster to replicate and scale- some potential investors mentioned that,” he explains.
Investors in the Middle East are notoriously a bit risk averse; Manna thinks perhaps investors in the U.S. and U.K. might have appreciated a one-hour delivery service. But Wheels Express ran out of time to go on the hunt for international investment.
“Imad Malhas was a great mentor,” says Manna, “I learned a lot from him.” When the business closed, he says, “I was sad for awhile, and then I took his advice. He told me to be frustrated for one week, and then get on with it and find a new challenge.”
That’s exactly what Manna has done, taking all of his knowledge about local logistics and delivery to another startup- one “in the e-commerce field” that has “been here for awhile.”
“I’m hoping I can add value to this startup, and help them become a regional household name in e-commerce. I’m really looking forward to the next stage of the journey.”
The closing of Wheels Express despite its initial success may sear this lesson into the minds of other young entrepreneurs, that it’s important to pitch a feasible growth model to investors before expanding, or grow in a sustainable, prudent manner, especially in tough markets like Jordan.
But it’s clear that Manna has no reason to linger on the past; his knowledge may help provide a missing puzzle piece for his new company, and nothing is lost in the Jordanian ecosystem if the knowledge is retained and similar products rebuilt.
Manna’s advice to startups is to “always look after your revenue; cash is king. Don't always try to protect the product you have, take time to improve it. Try to beat the market and get there first; sometimes being there first makes all the difference.”
And don’t worry about competition. “At a certain point, we had no competition,” says Manna. “Then a group of websites started to crop up in Amman. That was the most exciting period, seeing what they're doing and working to continue having a better service than they have. I truly enjoyed it."
"I thank our employees and partners who have joined our journey," he says.
Failure, rather than marking the end of a story, seems to have landed Manna in a bigger playground, so it pays to keep perspective. “Life goes on at the end of the day, and you have to pick yourself up and move on,” says Manna. “Why do we fall? In order to learn how to stand up again and move on. You don't always succeed at every startup that you create. I have learned a lot, and I'm willing to move on now and hopefully succeed.”