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A young entrepreneur is building the Amazon of Bangladesh

At just 26, Waiz Rahim is supposed to be involved in the family business, having returned home in 2016 with an engineering degree from the University of Southern California. Instead, the young entrepreneur is plotting to build the Amazon of Bangladesh.

Deligram, Rahim’s vision of what e-commerce looks like in Bangladesh, a country of nearly 180 million, is making progress, having taken inspiration from a range of established tech giants worldwide, including Amazon, Alibaba and Go-Jek in Indonesia.

It’s a far cry from the family business. That’s Rahimafrooz, a 55-year-old conglomerate that is one of the largest companies in Bangladesh. It started out focused on garment retail, but over the years its businesses have branched out to span power and energy and automotive products while it operates a retail superstore called Agora.

During his time at school in the U.S., Rahim worked for the company as a tech consultant whilst figuring out what he wanted to do after graduation. Little could he have imagined that, fast-forward to 2019, he’d be in charge of his own startup that has scaled to two cities and raised $3 million from investors, one of which is Rahimafrooz.

Deligram CEO Waiz Rahim [Image via Deligram]

“My options after college were to stay in U.S. and do product management or analyst roles,” Rahim told TechCrunch in a recent interview. “But I visited rural areas while back in Bangladesh and realized that when you live in a city, it’s easy to exist in a bubble.”

So rather than stay in America or go to the family business, Rahim decided to pursue his vision to build “a technology company on the wave of rising economic growth, digitization and a vibrant young population.”

The youngster’s ambition was shaped by a stint working for Amazon at its Carlsbad warehouse in California as part of the final year of his degree. That proved to be eye-opening, but it was actually a Kickstarter project with a friend that truly opened his mind to the potential of building a new venture.

Rahim assisted fellow USC classmate Sam Mazumdar with Y Athletics, which raised more than $600,000 from the crowdsourcing site to develop “odor-resistant” sports attire that used silver within the fabric to repel the smell of sweat. The business has since expanded to cover underwear and socks, and it put Rahim’s mind to work on what he could do by himself.

“It blew my mind that you can build a brand from scratch,” he said. “If you are good at product design and branding, you could connect to a manufacturer, raise money from backers and get it to market.”

On his return to Bangladesh, he got Deligram off the ground in January 2017, although it didn’t open its doors to retailers and consumers until March 2018.

E-commerce through local stores

Deligram is an effort to emulate the achievements of Amazon in the U.S. and Alibaba in China. Both companies pioneered online commerce and turned the internet into a major channel for sales, but the young Bangladeshi startup’s early approach is very different from the way those now hundred-billion-dollar companies got started.

Offline retail is the norm in Bangladesh and, with that, it’s the long chain of mom and pop stores that account for the majority of spending.

That’s particularly true outside of urban areas, where such local stores almost become community gathering points, where neighbors, friends and families run into each other and socialize.

Instead of disruption, working with what is part of the social fabric is more logical. Thus, Deligram has taken a hybrid approach that marries its regular e-commerce website and app with offline retail through mom and pop stores, which are known as “mudir dokan” in Bangladesh’s Bengali language.

A customer can order their product through the Deligram app on their phone and have it delivered to their home or office, but a more popular — and oftentimes logical — option is to have it sent to the local mudir dokan store, where it can be collected at any time. But beyond simply taking deliveries, mudir dokans can also operate as Deligram retailers by selling through an agent model.

That’s to say that they enable their customers to order products through Deligram even if they don’t have the app, or even a smartphone — although the latter is increasingly unlikely with smartphone ownership booming. Deligram is proactively recruiting mudir dokan partners to act as agents. It provides them with a tablet and a physical catalog that their customers can use to order via the e-commerce service. Delivery is then taken at the store, making it easy to pick up, and maintaining the local network.

“We’ll tell them: ‘Right now, you offer a few hundred products, now you have access to 15,000,’ ” the Deligram CEO said.

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Indeed, Rahim sees this new digital storefront as a key driver of revenue for mudir dokan owners. For Deligram, it is potentially also a major customer acquisition channel, particularly among those who are new to the internet and the world of smartphone apps.

This offline-online model — known by the often-buzzy industry term “omnichannel” — isn’t new, but in a world where apps and messaging is prevalent, reaching and retaining users is challenging, particularly in emerging markets.

“It’s not easy to direct people to a website today, and the app-first approach has made it hard,” Rahim said. “We looked at how companies in Indonesia and India overcame these challenges.”

In particular, he studied the work of Go-Jek in Indonesia, which uses an agent model to push its services to nascent internet users, and Amazon India, which leans heavily on India’s local “kirana” stores for orders and deliveries.

In Deligram’s case, the mudir dokan picks up sales commission as well as money for every delivery that is sent to their store. Home deliveries are possible, but the lack of local infrastructure — “turn right at the blue house, left at the white one, and my place is third from the left,” is a common type of direction — makes finding exact locations difficult and inefficient, so an additional cost is charged for such requests.

E-commerce startups often struggle with last-mile because they rely on a clutch of logistics companies to fulfill orders. In a rare move for an early-stage company, Deligram has opted to run its entire logistics process in-house. That obviously necessitates cost and likely provides significant growing pains and stress, but, in the long term, Rahim is betting that a focus on quality control will pay out through higher customer service and repeat buyers.

A prospective Deligram customer flips through a hard copy of the company’s product brochure in a local store [Image via Deligram]

Startups on the rise in Bangladesh

Rahim’s timing is impeccable. He returned to Bangladesh just as technology was beginning to show the potential to impact daily life. Bangladesh has posted a 7% rise in GDP annually every year since 2016, and with an estimated 80 million internet users, it has the fifth-largest online population on the planet.

“We are riding on a lot of macro trends; we’re among the top five based on GDP growth and have the world’s eighth-largest population,” Rahim told TechCrunch. “There are 11 million people in middle income — that’s growing — and our country has 90 million people aged under 30.”

“An index to track the growth of young people would be [capital city] Dhaka… you can just see the vibrancy with young people using smartphones,” he added.

That’s an ideal storm for startups, and the country has seen a mix of overseas entrants and local ventures pick up speed. Alibaba last year acquired Daraz, the Rocket Internet-founded e-commerce service that covers Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal, while the Chinese giant also snapped up 20% of bKash, a fintech venture started from Brac Bank as part of the regional expansion of its Ant Financial affiliate.

Uber, too, is present, but it is up against tough local opposition, as is the norm in Asian markets.

That’s because Bangladesh’s most prominent local startups are in ride-hailing. Pathao raised more than $10 million in a funding round that closed last year and was led by Go-Jek, the Indonesia-based ride-hailing firm valued at more than $9 billion that’s backed by the likes of Tencent and Google. Pathao is reportedly on track to raise a $50 million Series B this year, according to Deal Street Asia.

Pathao is one of two local companies that competes alongside Uber in Bangladesh [Image via Pathao]

Its chief rival is Shohoz, a startup that began in ticketing but expanded to rides and services on-demand. Shohoz raised $15 million in a round led by Singapore’s Golden Gate Ventures, which was announced last year.

Deligram has also pulled in impressive funding numbers, too.

The startup announced a $2.5 million Series A raise at the end of March, which Rahim wrote came from “a network of institutional and angel investors;” such is the challenge of finding a large check for a tech play in Bangladesh. The investors involved included Skycatcher, Everblue Management and Microsoft executive Sonia Bashir Kabir. A delighted Rahim also won a check from Rahimafrooz, the family business.

That’s not a given, he said, admitting that his family did initially want him to go to work with their business rather than pursuing his own startup. In that context, contributing to the round is a major endorsement, he said.

Rahimafrooz could be a crucial ally in future fundraising, too. Despite an improving climate for tech companies, Bangladesh’s top startups are still finding it tough to raise money, especially with overseas investors that can write the larger checks that are required to scale.

“I think the biggest challenge is branding. Every time I speak with new investors, I have to start by explaining where Bangladesh is, or the national metrics, not even our business,” Pathao CEO Hussain Elius told TechCrunch.

“There’s a legacy issue. Bangladesh seems like a country which floods all the time and the garment sector going down — that’s a part of the story but not the full story. It’s also an incredible country that’s growing despite those challenges,” he added.

Pathao is reportedly on track to raise a $50 million Series B this year, according to Deal Street Asia. Elius didn’t address that directly, but he did admit that raising growth funding is a bigger challenge than seed-based financing, where the Bangladesh government helps with its own fund and entrepreneurial programs.

“It’s hard for us as we’re the first ones out there, but it’ll be easier for the ones who’ll follow on,” he explained.

Still, there are some optimistic overseas watchers.

“We remain enthusiastic about the rapidly expanding set of opportunities in Bangladesh,” said Hian Goh, founding partner of Singapore-based VC firm Openspace — which invested in Pathao.

“The country continues to be one of the fastest-growing economies in the world, underpinned by additional growth in its garments manufacturing sector. This has blossomed into an expanding middle class with very active consumption behavior,” Goh added.

Growth plans

With the pain of fundraising put to the side for now, the new money is being put to work growing the Deligram business and its network into more parts of Bangladesh, and the more challenging urban areas.

Geographically, the service is expanding its agent reach into five more cities to give it a total of seven locations nationwide. That necessitates an increase in logistics and operations to keep up with, and prepare for, that new demand.

Deligram workers in one of the company’s warehouses [Image via Deligram]

Rahim said the company had handled 12,000 orders to date as of the end of March, but that has now grown past 20,000 indicating that order volumes are rising. He declined to provide financial figures, but said that the company is on track to increase its monthly GMV volume by six-fold by the end of this year. Electronics, phones and accessories are among its most popular items, but Deligram also sells apparel, daily items and more.

Interestingly, and perhaps counter to assumptions, Deligram started in rural areas, where Rahim saw there was less competition but also potentially more to learn through a more early-adopter customer base. That’s obviously one major challenge when it comes to growth, and now the company is looking at urban expansion points.

On the product side, Deligram is in the early stages of piloting consumer financing using its local store agents as the interface, while Rahim teased “exciting IOT R&D projects” that he said are in the planning stage.

Ultimately, however, he concedes that the road is likely to be a long one.

“Over the last 18-20 years, modern retail hasn’t made much progress here,” Rahim said. “It accounts for around 2.5% of total retail, e-commerce is below 1% and the long tail local stores are the rest.”

“People will eventually shift, but I think it’ll take five to eight years, which is why we provide the convenience via mom and pop shops,” he added.

Walmart partners with subscription-based children’s clothing startup, Kidbox

Walmart is getting into subscription-based fashion with today’s announcement of a partnership with Kidbox — a sort of “StitchFix for kids” where parents receive a personalized, curated box of children’s clothing on a seasonal basis. The deal will see Kidbox offered to Walmart.com’s online shoppers, where they can fill out a short style quiz, then receive their box of four to five fashion items for around $48 — or 50 percent off the retail prices of the bundled items.

The boxes are available in Sizes 0 through 14 for girls and 0 through 16 for boys, and include styles like sweaters, denim, dresses, graphic tees and more — based on whatever is seasonally appropriate. Kidbox today also has relationships with more than 120 fashion brands, including BCBG, Butter Super Soft, C&C California, Puma and others.

Like other subscription fashion box businesses, Kidbox last year launched its own private labels, too, based on its understanding of consumer trends and interests. To determine what will sell, the company leverages data it gleans from things like the initial style survey, customer feedback and by noting which items are most purchased or most returned, among other factors.

“Walmart has done a lot over the past year to establish itself as a go-to retailer for all things fashion, and we’re honored to partner with the retailer to expand its kids’ assortment online, while also saving parents time and offering them the value and convenience of a stylebox,” said Miki Berardelli, Kidbox CEO, in a statement. “At Kidbox, we pride ourselves on understanding kids’ fashion preferences while also creating moments for them to learn about the importance of giving back,” she added.

For Walmart, the partnership allows the retailer to enter into the subscription-based fashion business without having to build out its own service from the ground-up. Nor does it have to figure out the logistics involved with something like its own version of Amazon’s Prime Wardrobe, which heavily promotes in-house brands, but can be difficult to use because you can only shop Prime Wardrobe apparel — not all of Amazon Fashion.

Walmart also sees Kidbox as a way to expand its growing children’s apparel assortment, which has added more than 100 brands over the last year, including Betsey Johnson, Kapital K, Levi’s, Limited Too and The Children’s Place. More broadly, it wants to further increase its investment in online fashion — whether that’s by hosting high-end retail like Lord & Taylor; offering branded storefronts like those from Bonobos or Nike; doing celeb collabs like those with Sofia Vergara, Ellen DeGeneres and Kendall & Kylie; or by acquiring  fashion brands like ModCloth, ShoeBuy, ELOQUII and others.

Walmart Kidbox shipments will also contribute to the subscription businesses’ “give back” program, where each box purchased translates to clothing given to a child in need, in partnership with Delivering Good.

“We are thrilled to partner with Kidbox to introduce our first kids’ subscription apparel service offering premium fashion brands at a substantial savings,” said Denise Incandela, head of Fashion, Walmart U.S. eCommerce. “Over the last year, we have significantly expanded our portfolio of kids’ fashion brands as part of our broader effort to establish Walmart.com as a destination for fashion. Our partnership with KIDBOX enables us to round out our offering with additional national and premium kids’ brands.”

The partnership with Walmart follows Kidbox’s raise last year of $15.3 million in Series B funding to expand and scale its business. Canvas Ventures led the round, which saw participation from existing investors Firstime Ventures and HDS Capital, plus new strategic partners Fred Langhammer, former CEO of The Estée Lauder Companies Inc., and The Gindi Family, owners of Century 21 department stores.

Kidsbox isn’t the only subscription fashion box business to turn to traditional retail in recent months. This February, Kidbox rival Rockets of Awesome took a $12.5 million investment from Foot Locker, which will sell Rockets of Awesome merchandise on its own website and in its Kids Foot Locker stores.

By comparison, Kidbox’s deal with Walmart does not include an investment. The businesses declined to share the details of their arrangement, however.

But Walmart could put some of its brand in Kidbox in the future, perhaps.

“The team will continue to onboard other brands as the offering expands,” a Kidbox spokesperson said, avoiding an answer to a question about Walmart’s participation in the boxes themselves.

Kidbox today competes with StitchFix, which has its own kids’ line, and Amazon Prime Wardrobe, which lets customers shop for girls, boys or baby, in addition to adult apparel.

The startup doesn’t share its customer numbers or revenues, but claims 1.5 million “community” members, which is a combination of Facebook fans and email subscribers (where overlap is a given).

Indian social commerce startup GlowRoad raises $10M Series B

Indian social commerce startup GlowRoad announced today that it has raised a $10 million Series B. The round was led by CDH Investments, a Chinese investment firm, with participation from returning investor Accel Partners.

GlowRoad’s last funding, a $2 million Series A led by Accel, was announced in September 2017, a few months after it launched. The startup’s founding team includes Sonal Verma, a physician who focused on community medicine before co-founding telemedicine company HealthcareMagic in 2008. During her medical work, Verma realized that many stay-at-home mothers and housewives resell products in their neighborhoods. GlowRoad was created to help them take their businesses online by drop-shipping products.

GlowRoad screens manufacturers before adding them to its platform, then GlowRoad’s sellers decide which items to add to their stores and how to market them. The company now claims more than 100,000 resellers, 20,000 suppliers and 300,000 buyers. One of its most notable competitors is reselling platform Meesho, which has raised a total of $65.2 million from investors, including Shunwei Capital, Sequoia Capital India, RPS Ventures, Y Combinator, Venture Highway, SAIF Partners and DST Partners, according to Crunchbase.

Xiaom Q4 sees strong growth in overseas shipment and internet services

Xiaomi, the Chinese company known for its cheap handsets and a vision to drive revenues by selling internet services, has come in ahead of analysts’ estimates in its fourth-quarter profit although revenues missed expectations.

The Hong Kong-listed company more than tripled its net profit to 1.85 billion yuan ($276 million), exceeding the 1.7 billion yuan average estimate, Reuters reported citing Refinitiv data. However, revenue from the quarter missed the 47.4 billion yuan expectation, rising 26.5 percent to 44.4 billion yuan ($6.62 billion).

Xiaomi singled out overseas markets in its latest earnings report as the segment grew 118.1 percent to make up 40 percent of its total revenue in the fourth quarter, compared with just 28 percent for the year-earlier period. Xiaomi has been particularly well-received in India, where it holds a leading position in smartphone shipments according to market researcher Canalys, and it’s seeing rapid growth in western Europe.

Unlike conventional smartphone makers that are fixated on selling hardware, Xiaomi runs what it calls a “triathlon” business model comprising of hardware, software and retail. To put it in layman’s terms, the company is selling hardware through its network of online and offline stores, upon which users will consume the app services and in-app ads that come with its smartphones, smartwatches, smart air purifiers and hundreds of other connected devices.

Xiaomi has repeatedly billed itself as an “internet” firm, though so far smartphones are still its main economic driver, accounting for 65.1 percent of overall revenue in Q4. Despite a sluggish year for smartphone brands around the world, Xiaomi handsets grew nearly 30 percent to 118.7 million units in sales last year. The company predicted back in October that it was on course to hit the 100 million sales mark that month.

25.1 percent of Xiaomi’s Q4 revenue went to smart devices (excluding phones) and lifestyle items, representing an 87 percent year-over-year growth. The latter category, which ranges from umbrellas and suitcases to clothes and shoes, is pivotal to Xiaomi’s goal to attract more female users, an effort that has seen the company team up with selfie app maker Meitu. 

Internet services remain as Xiaomi’s smallest segment, bringing in only 9.1 percent of total revenue and growing at 61 percent year-over-year. But the highly lucrative business is bound to carry more load in the future as Xiaomi has promised to keep profit margins for smartphones and hardware under 5 percent.

Gross profit margin from Xiaomi’s internet services increased to 64.4 percent in 2018, up from 60.2 percent in 2017 driven by a higher-margin advertising business. The number is well above the 6.2 percent profit margin for Xiaomi smartphones, and the firm can potentially generate more internet-based income if it’s able to step up monetization of the 242.1 million monthly users on its ecosystems apps.

Sam’s Club to test new Scan & Go system that uses computer vision instead of barcodes

In October, Walmart-owned Sam’s Club opened a test store in Dallas where it planned to trial new technology including mobile checkout, an Amazon Go-like camera system, in-store navigation wayfinding technology, electronic shelf labels, and more. This morning, the retailer announced it will now begin testing a revamped Scan & Go service as well, which leverages computer vision and machine learning to make mobile scanning easier and faster.

The current Scan & Go system, launched two years ago, requires Sam’s Club shoppers to locate the barcode on the the item they’re buying, before scanning it using the Sam’s Club mobile app. The app allows shoppers to account for items they’re buying as they place them in their shopping cart, then pay in the app instead of standing in line at checkout.

However convenient, the system itself can still be frustrating at times because you’ll need to actually find the barcode on the item – often turning the item over from one side to the other to find the sticker or tag. This process can be difficult for heavier items, and frustrating when the barcoded label or tag has fallen off.

It can also end up taking several seconds to complete – which adds up when you’re filling a cart with groceries during a big stocking up trip.

The new scanning technology will instead use computer vision and ML (machine learning) to recognize products without scanning the barcode, cutting the time it takes for the app to identify the product in question, the retailer explains.

In a video demo, Sam’s Club showed how it might take a typical shopper 9.3 seconds to scan a pack of water using the old system, versus 3.4 seconds using the newer technology.

Of course, the times will vary based on the shopper’s skill, the item being scanned, and how well the technology performs, among other factors. A large package of water is a more extreme example, but one that demonstrates well the potential of the system…if it works.

The idea with the newly opened Dallas test store is to put new technology into practice quickly in a real-world environment, to see what performs well and what doesn’t, while also gathering customer feedback. Dallas was chosen as the location for the store because of the tech talent and recruiting potential in the area, and because it’s a short trip from Walmart’s Bentonville, Arkansas headquarters, the company said earlier.

Sam’s Club says it has filed a patent related to the new scanning technology, and will begin testing it this spring at the Dallas area “Sam’s Club Now” store. It will later expand the technology to the tools used by employees, too.