UK Markets closed

Egyptian on-demand grocery delivery startup Appetito bags $2M pre-Series A

·4-min read

Egyptian grocery delivery startup Appetito has raised $2 million in pre-Series A funding, the company confirmed to TechCrunch today.

The round, which comes after the company’s $450,000 seed round in April, was led by U.S. and MENA-focused venture capital firm Jedar Capital. Pan-African VC Golden Palm Investments, DFS Lab, some angel investors and family offices also put money into the company.

Appetito wants to tackle the inefficiencies in the FMCG supply chain in Egypt, CEO Shehab Mokhtar told TechCrunch in an interview.

Egypt, home to more than 100 million people, has a retail FMCG market size of about $50 billion and, similar to other African countries, is highly fragmented and inefficient. When products move from suppliers to distributors to wholesalers to retailers before the end consumer, a lot of value is missing in the supply chain, especially for the consumers and suppliers.

“We’re trying to provide customers not only with a convenient experience but also an affordable one by sourcing the products directly from the manufacturers and selling them directly to them,” Mokhtar said. “We believe that we can provide a convenient and affordable experience as well solving the inefficiencies in the supply chain of the retail industry.”

Appetito’s first line of products when launching in 2017 was groceries. But the company now offers non-food items such as personal care items, detergents and stationery products.

Mokhtar says Appetito sources all its products from top FMCG companies — Procter & Gamble, Hankin, Reckitt, Coca-Cola, Pepsi and Kellogg’s — strike deals with them and receives all their goods and products in its warehouses. The goods are then shipped to the company’s dark stores, of which there are currently seven in Cairo, Egypt’s capital city.

Suppose there is one takeaway this past year from the rise of rapid on-demand grocery and delivery startups globally, such as Gopuff, Flink and Gorillas (apart from their fundraising spree), it is how they prioritize speed and convenience over quality and affordability.

Appetito doesn’t want to take that direction; instead, it is keen on providing quality and affordable items to its users. In the words of the CEO, Appetito isn’t trying to become a copycat of those models because Egypt is a different market with a unique set of requirements.

The variation in models can also be seen in their delivery times. While GoPuff and the likes ensure that deliveries are completed in less than 10-20 minutes, Appetito’s deliveries can take up to an hour, the next day or weekly, if scheduled.

“We’re trying to mix between affordability and convenience. If we’re going to go only for the convenience, which is 10 or 15 minutes, that’s going to be at the expense of affordability,” Mokhtar said. “And this is something we do not seek or even try to get scale in Egypt or the countries that we are trying to penetrate going forward.”

To drive home how it prioritizes quality, Appetito has some private-label products under its name, a move that affords the company some exclusivity in the eyes of customers and delivers higher margins. Mokhtar sees it, alongside its newly launched meal kits option similar to Blue Apron’s model, as essential verticals for the company in the next couple of years.

Talking about how Appetito makes money, Mokhtar says the company gets discounts from suppliers and runs promotions for FMCG companies on its platform.

“Any company wants to promote their brands; they can promote it through us because we have more than 100,000 downloads on our app on Google Store and Play Store. We have a wide consumer base and this is an opportunity for brands to market themselves on our platform,” the CEO remarked.

Asked about revenue, traction and plans, Mokhtar said the company, which has grown its revenue 6x since April, wants to expand its dark stores to 150 in the next three years. In a statement, the general partner at Jedar Capital, Sherif Nessim, said the company’s orders grew 10x in the past year.

“Quick commerce and fast grocery delivery business model has been gaining grounds regionally and globally and I look forward to Appetito’s next phase as they expand to cover more areas in Egypt and start planning for regional growth,” he added.

As Appetito expands, it will face competition from companies offering comparable services such as Rabbit, GoodsMart and Breadfast. These startups, representing a fast-growing Egyptian grocery and convenience delivery space, collectively lead the way across Africa and have raised more money than their counterparts in other countries.

Should they keep raising money to accommodate the growing needs of consumers whose habits and shopping patterns have evolved since last year, Egypt will continue to dominate this space in Africa just the way Nigerian startups have been the most sought after when it comes to fintech across the continent.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting