By Courtney Trenwith
A future valuation of Noon in line with Alibaba and Facebook should not be discounted, says Courtney Trenwith
Not many people know about the second floor café in Building 3 at Emaar Square. Dubbed “the digital café”, it serves great food, great coffee and of course has pretty decent Wi-Fi. It has a “google” feel to it.
But when the history books of the Middle East digital revolution are one day written, chances are the café will get a chapter to itself. For the past 18 months, from dawn till dusk, this is where some of the finest digital brains on the planet have been gathering, to create one of the most remarkable e-commerce stories ever seen. It is where Mohamed Alabbar has been seen on an almost daily basis, hosting multiple meeting with multiple teams.
You can read about the results in our cover story this week, as we detail the launch of Alabbar’s new e-commerce platform Noon. When it goes live in January, Noon will sell 20 million products on day one — making it 10 times the size of the current market leader Souq.com. Noon is building the world’s largest warehouse in Dubai, the size of 60 football pitches, to store every kind of product you could ever want; Alabbar is not exaggerating when he calls this a “quantum leap”. This is a fast growing market that is heading only one way. And he is about to get a very big slice of it.
But knowing Alabbar, everything that has been revealed so far is probably just a fraction of what is to come. In our interview, he says that Emaar’s new Dubai Creek Harbour project will be “a completely different animal”. With Emaar having just hired Veresh Sita, former chief investment officer of Alaska Airlines at its chief digital officer, it is likely that Emaar itself — and its developments — are also on the cusp of a digital revolution. Dubai Creek Harbour could turn out to be one the most digitally advanced developments ever created.
And what of Americana, where Alabbar recently completed a $2.4bn takeover of the mega- group that includes KFC and Pizza Hut? Given the Middle East has the lowest food delivery penetration in the world, surely Americana is ripe for a digital push? Food deliveries in the region are now growing at 15 percent a month, just the kind of numbers that Alabbar likes.
We do know that for the past 12 months Alabbar has been busy hiring some of the best digital talents on the planet. But are they really all going to be working for Noon? While much has been made of the $1bn funding for Noon, our understanding is that Alabbar also has an additional $1bn tech investment fund. A whole range of companies in the digital sphere are likely to be on his radar. With Noon, he has already created the biggest e-commerce player in the region. We suspect he may also be on the verge of rolling out the largest ever Arab digital investment company.
If you are wondering where Alabbar is getting all his ideas from, it probably helps that when he goes home after spending a day in the digital café, he is surrounded by two of the most tech savvy people you will ever meet: his son Rashid, who runs SIVVI.com, which sells clothing and accessories from 130 high street brands, and his daughter Salama. Her boutique BySymphony.com already has over 100 high-end brands.
Alabbar often likes to talk about China’s e-commerce giant Alibaba, which on November 23 was valued at $232bn. The same day, Facebook was valued at $350bn. Now consider this: e-commerce sales in the region are $3bn but just 2 percent of total retail sales. Noon, when compared to similar sized players abroad, would not look out of place with a $20bn valuation today. By 2025, the e-commerce market will be worth $70bn.
When Alabbar talks about a “quantum leap”, is he also referring to a future market value of Alibaba and Facebook proportions?