Ask Onur Elgun about the critical element of Talabat’s success and his answer is one word: urbanization. “An 87 percent urbanization rate in GCC and Middle East North Africa (MENA) offers significant demographic potential,” Elgun explains. “Urbanization here is significantly higher than in the UK, USA, and Jordan.”
Launched in 2004, Talabat has become a household name. The company is a leading online food delivery service with operations in Kuwait, Saudi Arabia, UAE, Bahrain, Oman, Qatar, Jordan, Egypt and Iraq. The Talabat app seamlessly connects customers to their favorite outlets, with a promise to deliver orders in short timeframes, often within 15 minutes. Customers use the app to order deliveries from restaurants, grocery stores, florists, and pharmacies. And Talabat was named the official food delivery sponsor for Dubai’s Expo 2020.
Recently, Giuseppe Bonaccorsi, BCG Managing Director & Partner, interviewed Onur Elgun to discuss Talabat’s business model, expansion plans, lessons learned from the pandemic, and the importance of failing fast.
Talabat operates in a very competitive space. What are the company’s main advantages and what are your ambitions going forward?
We operate in nine countries in the region and have several competitive advantages. One is our local know-how as Talabat was born and raised in MENA. Second, is our unmatched scale—every day we have more than 3 million users on our app, we serve more than 50,000 partners, and to date we count more than 200 million app downloads. Third is our tech talent as Talabat is home to more than 200 engineers. And, finally, we have a very strong social element in our core offering, which is food, and upon which we can build. As for our ambitions, in a nutshell, we want to eliminate the need to plan for the high-frequency essential needs of people in the region. Simple as that.
Regarding the market, how big is the overall food and grocery online delivery market in GCC and what is the outlook?
MENA has a huge demographic potential. As I mentioned, the urbanization rate in GCC and in wider MENA exceeds 87 percent. So that's a critical element for our success. Our region also boasts a young and tech-savvy population. I would say building on those the market size we estimate the revenue pool to be more than $5 billion, and we expect this number to double in less than four years.
What are the lessons learned from the pandemic? How did you adapt to such an exceptional market?
We are all still learning and adapting, but we have succeeded at doing three things correctly and quickly. We partnered with local authorities, providing customer sentiment, partner sentiment, and on-the-ground logistic support. We also focused on experimenting and failing fast. What I mean by this is that in ambiguous situations, it is important to speed up experiments—to test, fail, move on, and try the next one until we hit the target. In a pandemic, in a crisis, speed trumps precision. We want to move fast and fail fast. Finally, we concentrated on getting closer to our customers and partners, going beyond big data and data mining to also talk to them, because what you see in the data may not reflect anecdotal information. By combining data and anecdotes we get closer to our customers and partners.
We see more companies becoming bionic. They are integrating technology with the human experience and to outcomes for customers. How does this apply to Talabat and how you operate in your markets?
That is a very good point. Simply having an amazing technology or a brilliant business idea is nowhere close to a market win. You have to make sure all the holistic initiatives you run make sense together. Talabat food and groceries are at our core, and we try to innovate within this large space. First, we have our dark stores for delivery only and our grocery stores that deliver in less than 20 minutes. This is number one, how we drive innovation in our core. We are also investing heavily in cloud kitchens. In fact, at Expo 2020 Dubai, we are very excited to showcase our state-of-the-art cloud kitchen. And we are pushing ahead toward alternative delivery methods. Today, we are already testing drone deliveries in the region. And, last but not least, talent, talent, talent. For companies like Talabat to survive and bring more value to our customers and partners, tech talent is super critical. We are doing our best to attract and retain top tech talent.
That's great to hear. I'm so impressed by your progress, Onur. Thank you for this very interesting discussion.