By Daniel Shane
From its humble beginnings on an Istanbul university campus, takeaway portal Foodonclick.com has progressed into one of the region’s ecommerce success stories.
During the searing summer heat in the UAE, when many are loathe to step outside of the air conditioned comfort of their homes, Foodonclick.com is something of a life saver.
The site provides web users with access to a veritable buffet of food options at the click of their fingers, which are then delivered directly to their doorstep without ever having to pick up the phone. The service covers hundreds of the best-known restaurant brands across a variety of cuisines, without charging its users an extra dirham for the privilege.
Foodonclick.com now sees thousands of takeaway orders everyday and has set its sights on further expansion across the GCC.
The company was founded by Gokhan Akan, currently CFO, as Yemeksepeti.com in his native Turkey at the turn of the millennium alongside friends Nevzat Aydın, Melih Ödemiş and Cem Nüfusi.“I started up the business with two friends, all three of us were in university in Istanbul, and the idea was simple actually,” he recalls. “Food delivery is a very big market for Turkey and we thought that the internet had a lot of advantages over ordering via phone. We wanted to combine these, so we created a website.”
Any entrepreneur will tell you that a great idea and a successful business are two very different beasts, and so proved to be the case with Yemeksepeti.com. Akan believes that in 2000 the concept was perhaps a little ahead of its time, with the internet only just starting to emerge as a serious retail platform in developed markets like the US and Europe.
Soon after going live, however, the dot-com bubble burst, causing the NASDAQ stock exchange to plummet and confidence in the internet-based businesses worldwide to go through the floor.
“It wasn’t a great starting time, because it coincided with the NASDAQ crash. But I think apart from this the idea was a little bit ahead of its time,” Akan admits. “Also, the internet itself as an infrastructure wasn’t ready for it. Everyone used dial-up modems.”
During this period, Akan says that the company received orders just “five or six times a day” and relied on cash from friends and family to keep the fledging start-up on its feet. “At the beginning it was our own money, then we deployed all our own resources and it became friends’ and families’ money,” he adds. “There was not one point – there were many, many points. It’s tough – especially in the first five years, we had a lot of hardship.”
In 2002, Akan left Turkey to pursue a masters degree in finance at London Business School, a decision he says has improved his commercial aptitude when it comes to running Yemeksepeti.com.
It was only four years later that he says Yemeksepeti.com really began to take off, with the advent of faster internet connections and more advanced mobile devices precipitating this. “After 2006 and 2007, when internet penetration was much higher and with smartphones starting up, then it picked up and we never looked back,” Akan recalls.
Akan believes that the website succeeded where others may have failed as it tailored its user experience specifically to the Turkish market, whereas at the time other entrepreneurs were busy trying to emulate what well-known ecommerce firms were doing in the West.
“It was a very interesting experience, because in emerging markets when you see new entrepreneurs doing stuff – they most of the time get inspired by bigger companies in the US like eBay, Yahoo! and Amazon, but with [our] model that didn’t exist then,” he explains. “It was a model that we specifically designed for Turkey and has been developed over the years.”
Today, the website sees more than 60,000 orders per day in its native Turkey, with more than 1.2m registered users in that country and over 200 employees. “The core business is profitable, but the profitability is not very important for us for the time being, because even after thirteen years the company is growing in excess of 160 percent per annum,” Akan explains.
The site does not charge its users any additional fees for their food orders than they would by ordering from the restaurant directly, instead deriving revenue from a combination of commissions and advertising fees from the outlets it lists.
Under its alternative guise Foodonclick.com, the website has so far launched in Dubai, Abu Dhabi, Sharjah, Muscat and Doha. Akan says that while many of the market dynamics of Turkey and the Gulf are similar, there have some key differences that Foodonclick.com has made to its business model amid the expansion. “It’s a very seasonal business. In Turkey, when it’s summer people are very happy to go out and dine in the sun, whereas here in summer it’s so warm that you order more,” he says.
Akan adds that Foodonclick.com now hopes in the near future to move into the remaining Gulf countries where it does not currently have a presence, namely Saudi Arabia, Qatar and Kuwait.
“The objective is to launch in pretty much every GCC country in one to one-and-a-half years time,” he says. Akan adds that the company has already sent sales teams into some of these markets to assess potential market strategies and will be making announcements in this regard imminently. “We are doing the groundwork in many countries, and we will announce them one-by-one. In the next couple of months we will be announcing them.”
In May this year Foodonclick.com announced that it had appointed Aramex founder and former CEO Fadi Ghandour to its board of directors. While Ghandour is best known for his work at the Jordan-based logistics and transportation giant, he is also one of the Middle East’s best known entrepreneurs and angel investors. MENA Ventures Investments, which he founded, has invested over $20m in more than 65 seed stage internet and technology start-ups in the region. Ghandour has also invested directly in Foodonclick.com, says Akan.
“We feel very lucky and privileged to have Fadi on board, because when you think of entrepreneurship in the Middle East, Fadi is arguably the first name that comes to peoples’ minds,” Akan adds. “He has tremendous experience in this market and he likes technology and he likes our business model.”
Going forward, Foodonclick.com will not just have the support of Ghandour’s wealth of experience. In September 2012, the company announced a $44m round of funding from New York-based private equity firm General Atlantic in exchange for surrendering a minority stake and a seat on the Foodonclick.com board.
“This partnership doesn’t change the management of the company,” Akan explains. “Whenever we need their help, [or] we need to tap into their resources, they’re always available."
Akan says that Foodonclick.com will use the cash from the General Atlantic deal to accelerate its expansion plans, as well as implement some new, value-added services in its home market of Turkey. He adds that the firm is happy with the current level of funding following the General Atlantic deal, but does not rule out potential further funding down the line. “I think we’re done [with private equity] for the time being,” he says.
Foodonclick.com is also eager to make more of the opportunities the proliferation of smartphones has brought. In the Gulf, smartphone penetration is among the highest in the world, and Akan is keen to capitalise on this. “I think the smartphone side of things has a brilliant future. For the time being it’s approximately 20 percent of our orders coming from smartphones, and it’s growing extremely rapidly. In the future – in one year or two – if it doubles I will not be surprised at all,” he explains.
Akan believes that Yemeksepeti.com is now synonymous with online food delivery in Turkey, and it is this renown that he hoping to replicate with Foodonclick.com in the Gulf countries.
“In Turkey when you think of food delivery [we] are the first name that comes to mind, and ideally when you think of food delivery here you will think about Foodonclick.com immediately,” says Akan.
Following the launch of Yemeksepeti.com in Turkey almost a decade-and-a-half ago, Akan and his three co-founders endured more than five years of hardship before finally seeing their start-up flourish into the success it has become today. They will, however, hope that doing likewise in the Gulf is not such a long road.