How Delivery Startup Yalla Fel Sekka is Digitizing Egyptian Logistics

Delivery startup Yalla Fel Sekka (YFS) has been digitizing Egypt’s logistics sector since it was founded in 2019 by childhood friends Yasmine Abdel Karim and Khashayar Madhavi. Serving supermarkets, SMEs, and e-commerce businesses, YFS enables companies to sell directly to customers through its many warehouses, dark stores and delivery drivers across Egypt. Less than three years old, the startup is now working with some of the biggest names in the industry including Carrefour, Lulu, Spinneys, and InstaShop.

With more than a decade of experience working at Schlumberger’s global HR branch in Paris, Abdel Karim was looking for ways to create a meaningful impact in Egypt during the country’s transition to economic and political stability in late 2017. Taking a sabbatical from work, she moved to Boston to study public policy at Harvard University. It was during this time that the idea of YFS blossomed.

Seeing a gap in the instant delivery market, the founders decided to create an on-demand service platform in Egypt. As a result, Abdel Karim changed her major and focused on business and entrepreneurship courses instead.

“All this happened when I was in my middle year at Harvard,” Abdel Karim tells StartupScene. “I shifted all my classes to study business, technology venture, entrepreneurship finance, social private entrepreneurship, you name it! I took everything related to entrepreneurship, whether it was helpful or not.”

Two years later in March 2020, YFS was officially launched in Egypt. Today, the startup is  looking to expand its footprint across Egypt and emerge throughout the MENA region.

KICKING OFF A NEW BUSINESS

Starting any new business is challenging, but starting it while living abroad and seeking funding from investors unfamiliar with the Egyptian market is a different matter altogether.

During her time at Harvard, Abdel Karim relied on her studies to develop the business plan and financial model, as well as pitch to investors to help raise capital for YFS. Her work proved successful, and she received funding from Harvard’s Graduate Syndicate Fund, a fund that invests in pre-seed and seed stage startups led by Harvard’s recent graduates.

The funding also encouraged other investors to deploy funds in the startup, with Flybridge Ventures and Squared Capital investing $2.5 million in YFS in 2019.

“It wasn’t easy to raise the funds, because we did not have the logistics background and Egypt was a new market for investors, who are mainly American funds,” explains Abdel Karim. “They don’t know anything about Egypt. It wasn’t an easy process, so it took a bit of time for the KYC.”

To date, the startup has secured a total of $10 million in investments, including $7 million from its latest Series A funding round in 2022.

BATTLING ECONOMIC WOES

Egypt’s economic woes of a devaluing currency, import restrictions, and a shortage of foreign currency have impacted many startups in the country, including YFS.

Although the startup has grown substantially in 2021, recording a 25% CAGR and receiving more than 10,000 orders a day, according to Abdel Karim, its growth slowed down in 2022, like many startups in the country, to reach around 55% in growth revenues.

“Our numbers slowed down in 2022, but we still had growth,” adds Abdel Karim. “We are now aiming for complete profitability. So, that is our mindset.”

To counter the effects of economic challenges, Abdel Karim worked on two fronts - increasing revenues and optimizing operations. She did that by growing the startup’s customer base, expanding its range of services, and increasing prices, albeit marginally. At the same time, she cut down on costs by making operations more efficient.

“We took this as an opportunity to optimize operations,” says Abdel Karim. “Technology really helped to make the startup more efficient and automate a lot of processes. For example, I used to have supervisors, or I used to go myself and check on operations, but now I have an app that could help bring in more clients without necessarily increasing our operations team. So, I can still offer my clients with an affordable price, but I also reduced my cost internally.”

But the ongoing devaluation could be concerning in the long term since it doesn’t reflect a startup’s real growth. “The devaluation is a problem,” she says, “It doesn’t show the tremendous amount of work that you’ve been doing. Look, we grew, we increased efficiency, we increased our growth margins and we managed our costs. But when you convert that to USD, you’re making less money than last year.”

LOOKING FOR OPPORTUNITIES

After establishing itself as a market leader in the grocery segment, YFS is also looking to expand its presence in other sectors, mainly e-commerce.

Although the e-commerce sector was still not yet ready for instant delivery when YFS first entered the market, Abdel Karim believes that now is a good time to enter this sector, particularly since it has evolved significantly during the last few years.

“We first started to work with small SMEs, but the market wasn’t ready for instant delivery or even next day delivery,” says Abdel Karim. “With instant or next day delivery, vendors have to pay soon after the products are picked up and delivered, but they weren’t ready for that yet, from a cost perspective. Now, as e-commerce has evolved, there is more opportunity in this sector.”

The startup is also launching new products, such as the 360 solutions to provide the technology, operations and manpower to companies, enabling them to reach their customers quickly while focusing on their core business.

Eyeing expansion in Egypt, YFS is aiming to establish operations in Upper Egypt and the Delta area, in addition to its existing outfits in Cairo, Giza, Alexandria, Mansoura, and Tanta. Expanding to other neighboring countries could also be on the horizon for YFS. “We’re looking to expand to other countries, we ‘re still studying opportunities at the moment,” she says.

But ultimately, Abdel Karim’s wants to continue creating impact in the country through her startup. She hopes to see more entrepreneurs, particularly women, enter the startup space as they are important for bringing about economic and societal progress.

“We need more people, especially women as startup founders,” she says. “A CEO is a very lonely job, because in the end, you are the final decision maker. You have to believe in yourself, there are so many people depending on your decisions. We need more people to believe in themselves and in their ideas.”