E-commerce Growth in MENA and Bosta's Series A Funding

According to a recent report from Bain & Co., the e-commerce sector within the Middle East and North Africa (MENA) region is projected to reach $28.5 billion by 2022. This represents substantial growth from a valuation of $8.3 billion in 2019.

Egypt's Expanding E-commerce Market

Egypt stands out as a particularly dynamic e-commerce market within the region. It is forecast to experience an annual growth rate of 33%, ultimately achieving a market size of $3 billion by 2022.

The Importance of Last-Mile Delivery

Successful e-commerce operations fundamentally depend on a robust and efficient last-mile delivery infrastructure. Bosta is a company operating in Egypt that focuses on providing logistics and last-mile delivery solutions specifically tailored for small businesses.

Bosta Secures $6.7 Million in Series A Investment

Today, Bosta has announced the successful closure of a $6.7 million Series A investment round. Silicon Badia, a U.S. and Middle East-based venture capital firm, spearheaded the investment.

Additional participation in the round came from 4DX Ventures, Plug and Play Ventures, Wealth Well VC, Khwarizmi VC, and a number of other regional and international investors.

This new funding arrives one year after Bosta secured a $2.5 million investment, bringing the company’s total funding to $9.2 million.

Company Origins and Services

Founded in 2017 by Mohamed Ezzat and Ahmed Gaber, Bosta provides customers with next-day delivery options. The company also manages exchange shipments, handles customer returns, and facilitates cash collection.

From Lynks to Bosta

The genesis of Bosta can be traced back to Mohamed Ezzat’s experience at Lynks, a previous consumer goods startup he was involved with. Lynks, notable as the first company from Egypt to receive backing from Y Combinator, enabled Egyptian consumers to purchase products from the U.S., China, and the U.K.

As COO of Lynks, Ezzat oversaw logistics, international customs clearance, and last-mile delivery operations. In 2016, Egypt faced economic challenges, including a devaluation of the Egyptian pound and government restrictions on imports.

While these conditions resulted in slower growth for Lynks, Ezzat became increasingly focused on resolving the difficulties associated with last-mile delivery, recognizing it as a significant obstacle.

Identifying a Market Need

“The last mile was consistently a major challenge,” Ezzat explained to TechCrunch. “At that time, e-commerce represented only 1% of total retail value. I continually questioned why, if we wanted e-commerce to expand, there wasn’t a strong company dedicated to last-mile delivery, as every e-commerce transaction ultimately relies on a courier service.”

Addressing a Fragmented E-commerce Landscape

The e-commerce sector is characterized by fragmentation, with approximately 80% of transactions originating from small businesses utilizing platforms like Facebook and Instagram. Many of these businesses lack a sophisticated delivery infrastructure.

Recognizing this gap, Ezzat departed from Lynks the following year to establish Bosta.

Focus on Profitable Growth

Bosta aims to empower these businesses to grow profitably. The company also strives to streamline logistics and provide customers with comprehensive control over the delivery process.

“Bosta facilitates the delivery of any product directly to your doorstep. Customers can pay in local currency, and we manage the entire process – from purchasing and shipping to customs clearance and final delivery,” the CEO elaborated.

An Uber-Like Delivery Model

Bosta does not maintain its own fleet of delivery vehicles. Instead, it employs an operational model similar to Uber, where drivers register as contractors and earn income upon completion of each delivery.

Delivery Statistics and Growth

Since its inception in 2017, Bosta has successfully delivered over 4 million packages to businesses, with more than half of those deliveries occurring since the beginning of the pandemic last year.

The company currently completes more than 300,000 deliveries each month, representing a 3.5-fold increase since its previous funding round, as stated by Ezzat. Furthermore, over 2,200 businesses utilize the platform daily, achieving a 95% delivery success rate.

Partnerships and Pricing

In addition to serving small businesses, Bosta collaborates with prominent e-commerce platforms such as Souq (an Amazon company) and Jumia.

Bosta’s pricing structure varies based on the volume of goods transported. Small businesses typically pay around 35-40 Egyptian pounds per shipment, while larger clients are charged a lower rate of 20-25 Egyptian pounds.

Industry Perspective

Fawaz H Zu’bi commented on the investment, stating: “E-commerce has consistently held immense potential in our region, but has often been hindered by challenges related to payments, logistics, market fragmentation, and customer adoption. We are pleased to see companies like Bosta emerge to address these issues and unlock the full potential of e-commerce in a region that is now embracing digital transformation.”

Future Plans and Expansion

Over the next two years, Bosta intends to deliver more than 15 million parcels within Egypt and serve over 20,000 businesses. The newly acquired funds will be allocated to these objectives, as well as to expanding operations across Africa, the MENA region, and the Gulf Cooperation Council (GCC).

“Our primary goal is to dominate the Egyptian market,” Ezzat affirmed. “We aim to ensure next-day delivery service throughout Egypt, not just in Cairo, where we currently operate. We also aspire to become a market leader in e-commerce across the continent and achieve profitability. Expanding operations into Saudi Arabia is another key target.”