October 6, 2021

Why a Kuwaiti online classifieds company is turning away from regional expansion

4sale is focusing on growing its active users to 2 million within the next three years, half the population of Kuwait, said its CEO

While regional expansion is an often-cited goal among start-ups and SMEs, it is not the right route for the online classifieds business, according to Tarek Sakr, CEO and founder of Kuwait-born 4sale.

Instead, Sakr’s online classifieds company is focussing on further growing its footprint in Kuwait, already impressive at 1.4 million active users in a population of 4 million.

“We wanted to keep growing inside of Kuwait instead of going regional because doing so is very difficult in our business where it is all about local players,” said Sakr.

Sakr and his partners acquired 4sale in 2014 following six years of experience with online sales through Q8car, an e-commerce platform for vehicles, about which Sakr said: “We grew very fast because there weren’t many people looking at this [space] so we didn’t have competition and were given a lot of runway to grow on our own.”

This was still the case in 2014 with 4sale and so the company also had the advantage of being one of the early players. Using his previous experience with Q8car, Sakr moved fast adding all of the verticals he found in print classifieds to the site to attract users and achieve market dominance.

“In our business, the first mover advantage is a very big thing. Once you attain critical mass, and you get most of the people using your platform, it is very hard for a second player to come in even if they do it for free,” explained Sakr.

“Therefore, going outside is a waste of resources and a waste of money in our field. If I go to Dubai, for example, I will spend a lot of money over the course of two-to-three years to become the second or third biggest player in the city. Can I charge? Absolutely not,” he continued.

Users get two free ads on 4sale after which they are charged a small amount for big-ticket sale items such as vehicles or property – smaller ticket items, such as electronics or phones, can still be listed for free.

A year-and-a-half into their launch, 4sale reached 5,000 listings per day and “got so big that we were being called by international players to buy or invest in our business”, said Sakr.

At that time, 4sale was profitable at 65 percent net profit margins and so Sakr was not seeking investor money as such. But, in 2018, when Kuwait’s NBK Capital expressed interest in investing in the company, he reconsidered his stance.

“We thought that if we were affiliated with NBK, we would be able to grow the way we like and get local support,” said Sakr, explaining how this move challenged him as an entrepreneur and business-owner.

“As an entrepreneur, when you become very profitable, you become defensive and complacent. As much as I want to grow, when I've been doing the same recipe for a while and it keeps working, it's very difficult to take yourself out and try something different,” he explained.

“So when they came in, they pushed me to do things like hiring international talent when previously I was resistant to that idea and would become defensive over my own business which is a big mistake,” continued Sakr.

Combining the experience of international talent with the local know-how of Sakr and his team proved to be a good recipe and 4sale grew threefold with NBK Capital’s presence.

“We’ve almost tripled since NBK came in and we’ve been getting a lot of calls from international companies looking to buy us out to further their expansion. But, we just want to do our thing for now because there's so much in this field right now, we're afraid we might miss out,” said Sakr.

“I believe there's a lot of room left [to grow] and so do my partners, but the problem is my partners are also private equity so, by nature of their mandate, they cannot stay with us for five or ten years. Ultimately, we will probably end up selling the business but today, we don’t want to focus on that because when you have the mind-set of selling, you lose a lot,” he continued.

For now, Sakr wants to focus on further growing 4sale’s profitability. “Once you get to a point where you can take a fee of the transactions going on these platforms, you get to another level. This is our endgame and we think we can get there,” said Sakr.

“We have about 1.4 million active users between the site and the app. The more I convert these general users to monthly active and daily active users, the more it trickles into my payment and ecosystem. To do so we need to make sure that our users know they can use the site for a variety of purposes,” he continued. Users can hire services such as plumbers or electricians on 4sale, for example.

“I honestly believe that two to three years from now, we will probably be very close to 2 million active users for a country of 4 million,” said Sakr.


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