Cairo delivery sector heats up as Goodsmart seeks expansion
Opening the fridge after a long day at work and realizing someone has taken the last cold drink, or coming home to find you’ve forgotten the milk happens to everyone now and then.
Rami Fawzi, his three brothers Amr, Tarek and Ahmed, and their friend Ahmed Sudan teamed up to launch Goodsmart, a delivery service which provides a grocery ‘post box’ at a customer’s address so they don’t have to wait at home for their order.
It was Amr who had the idea for a grocery delivery service that cut out cash payments and allowed customers to order from multiple suppliers through one app.
“Normally you can order your groceries but you have to wait for the delivery person and be at your home to receive it personally or have someone be at your home,” Rami Fawzi said. “The suppliers include local bakery shops such as Queen Bakery and El Forn bakery, local butchers such as Meat Chop, Imtenan and Tabi3y [natural] organic farm.”
They have access to about 6,000 different products.
Goodsmart soft launched in September 2014 and spent the next year developing the app and operations before an official launch in November 2015.
During that time, the company tested the interface with 150 early users in Cairo’s western satellite suburbs of Sheikh Zayed and 6th of October City, targeting wealthier denizens of those gated suburbs.
“It started as a word of mouth with no marketing plan,” Fawzi said. “After the official launch we grew to over 700 clients [by May].”
Goodsmart vs Cairo summer
Groceries are delivered to a box installed outside the customer’s house: it’s triple insulated and includes ice packs, which the delivery team are responsible for changing and making sure products placed remain fresh.
Normal orders can be placed throughout the day until 9pm and deliveries arrive in the box before 6am the following day. Customers pay through an online ‘wallet’, which can be filled via a credit card or by depositing cash in the box.
Fawzi said the feature that separated Goodsmart from its competitors was scheduled deliveries. “Clients can choose a specific product and set a constant delivery date for it,” he said. “Deliveries can be once a month, once every day, once every other day.”
A key competitor is Knock Mart, a startup also in the grocery delivery business operating on the other side of town in New Cairo. It focuses on getting a delivery to customers within a hour of the order, catering to the on-demand market rather than regular repeated orders.
Awfar Market is another newcomer which delivers from all the major supermarkets, again on demand but users can pick the time they want the order to arrive.
But Goodsmart is also competing against every supermarket in the city. Cairo has an advanced home delivery system - almost every business in the city, be it groceries or pharmaceuticals, delivers. Already one startup, Beqala, has gone under, closing its doors in November 2015 after three years of operation.
The app allows people to order but also to chat with a client care ‘agent’. “Clients who have complaints, suggestions for products to add to our list can choose to chat with an agent through the application,” Fawzi said.
“If a client has a quality complaint, the product is returned with no questions asked.”
Six client care agents went through an intense training three-month-course on how to deal clients and care for their needs. The company employs 32 people.
“The training was designed and developed by the company,” Fawzi said, explaining that they were inspired by international client care courses.
During the soft launch complaints averaged around 12 percent of total orders, but now they’ve got that down to 3 percent.
The business model
Goodsmart has an interesting three-tiered revenue model: subscriptions, profits from goods sold, and marketing for other companies.
Goodsmart’s membership fees, which covers box installation and rental, start at 140 Egyptian pounds (US$15.80) for one month, 740 pounds (US$83) for six months, and 1,050 pounds (US$118.50) for a year. The company charges 5 pounds (US$0.50) for each delivery.
Suppliers provide the goods at wholesale prices and Goodsmart makes a profit by selling them with a mark-up to match retail prices, so it’s not necessarily cheaper than buying from a supermarket.
And finally, other companies pay Goodsmart to place free product samples in customers’ boxes.
“We are the Trojan horse that enters people’s houses,” Fawzi said.
The five founders have invested heavily in the company already, sinking “millions’ of Egyptian pounds into the business already, according to Fawzi, and have ambitious expansion plans, to be funded by the Series A investment they’re currently pitching for.
They want to enter the inner city suburbs of Zamalek, Maadi, Mohandeseen and Dokki this year and be competing with Knock Mart in New Cairo after this summer.