When Sanad Yaghi tried to order an ice cream from his local baqala grocery shop in Dubai during the Covid-19 pandemic, he ended up with a tomato, because of a language barrier.
“It was unclear to me why these stores were yet to have any kind of digital presence. I realised quickly that they would need an operating system to facilitate both online ordering and digital payments,” says Mr Yaghi, who has a background in venture capital with Mubadala Ventures.
Sensing a market gap for a digital store management platform, Mr Yaghi, Ali Al Sayegh and Shadi Joulani decided to launch Dukkantek — dukan is the Arabic word for corner shop — to drive much-needed digital transformation in the traditional retail space.
“We founded Dukkantek in January 2021 during the pandemic to meet the growing demand for digital advancements within the community retail sector,” Mr Yaghi says.
“Our company aims to solve the technological challenges stores may face by not having an existing digital presence. We have seen phenomenal growth to date, highlighting a severely underserved market and reaffirming the local demand for such a solution.”
The coronavirus pandemic hastened digital adoption in the Middle East and North Africa, leading to an increase in online shopping, in particular.
The region's e-commerce market is expected to reach $49 billion in 2025, up almost 55 per cent from 2021, a report by EZDubai, an e-commerce zone in Dubai, and Euromonitor International showed last month.
The UAE’s e-commerce market alone is forecast to grow 60 per cent to more than $8bn by 2025 from 2021.
Community retailers in the UAE without a digital presence, who were unable to accept online payments during the pandemic, were severely affected due to the drop in customer footfall.
“Our company was created to assist businesses without a digital presence and support smaller businesses to continue operating efficiently,” says Mr Al Sayegh, an angel investor who has worked at SoftBank Vision Fund and Mubadala Ventures.
“Dukkantek is able to reduce certain financial losses a business may incur by not providing customers with the option for cashless payments.”
Their clients range from small grocery shops and florists to electronic stores, Mr Al Sayegh says.
“What ties them all together is that they are micro, small and medium enterprises and typically non-chain stores that have been the backbone of their communities for years,” he adds.
The Dukkantek platform offers advanced in-store boxes fitted with a point-of-sale system that can be accessed online from anywhere in the world.
It uses cloud computing to offer predictive analytics and transparency on operations, and helps manage retailers' digital presence, says Mr Joulani, who previously worked in procurement and cost-optimisation at the Royal Bank of Canada.
“We provide our merchants with various online and in-store payment options. Dukkantek facilitates card payments, manages the merchant’s online presence and enhances in-store operations,” Mr Joulani adds.
The company's software allows business owners to keep track of transactions, monitor sales, calculate value-added tax, generate reports and evaluate profit margin.
Additionally, the cloud inventory management system helps merchants to track stock, manage stock value, organise inventory, co-ordinate fast-moving products and generate reports for analysis, according to the co-founders.
Mohammad Khaimudeen, owner of Al Dalal Grocery in Ras Al Khamiah, recorded each transaction manually in a notebook before he signed up with Dukkantek.
“I did not have an idea of how much stock I was selling, which products sold well and those that did not. After registering with Dukkantek, I use their online system regularly for transactions and sales data. I also have a good idea about stock now," Mr Khaimudeen says.
Dukkantek's co-founders, who met as students in 2006 at the American Community School of Abu Dhabi, initially bootstrapped the start-up.
The business, which started off with just the three of them, has since expanded to 140 employees with operations in the UAE, Kuwait, Qatar, Bahrain and Oman. It has more than 3,000 businesses registered in the UAE.
“We are now live across five markets in the GCC and are excited to further grow to provide our services internationally,” Mr Yaghi says.
To support its expansion, the start-up closed a seed funding round in March, raising $5.2 million. Global Founders Capital led the round, with participation from Colle Capital Partners, Wamda Capital, Plug and Play and Comma Capital. Other strategic investors in the round included Nowais Capital, Annex Investments and AMK Investment Office.
Start-ups in the Mena region registered record venture capital funding worth $2.6bn last year through 590 transactions, according to a report by data platform Magnitt. About 35 start-ups announced exits in 2021, indicating a maturity in the region’s start-up landscape.
UAE start-ups accounted for 26 per cent of all deals closed across the region and 45 per cent of all funding raised in 2021, Magnitt said.
“In order to ensure all merchants have the ability to partner with Dukkantek, we run a capex-opex business model that ensures no merchant is priced out of a partnership. This revolves around charging a software fee for the Dukkantek POS and applications,” Mr Yaghi says.
The main challenge faced by Dukkantek is technology adoption among traditional retail merchants.
However, its competitive advantage is its ability to support digital usage in a segment that typically includes “late adopters by having a laser focus on developing user-friendly interfaces and technology”, according to Mr Al Sayegh.
“We redefine the conventional way of managing tasks and sales. Dukkantek aims to strengthen local community stores and power digital transformations with end-to-end technology that enhances and streamlines all business processes.”
Q&A with Dukkantek's co-founders
What already successful start-up do you wish you had started?
Sanad Yaghi: Uber, it is a true disrupter.
What is your next big dream?
Sanad Yaghi: [Currently] focused on Dukkantek, but I think food technology is a very exciting space.
What new skills have you learnt in the process of launching your start-up?
Sanad Yaghi: If I were to pick one, it’d be grit.
If you could start all over again, what would you do differently?
Sanad Yaghi: I wouldn’t change a thing, as I truly believe everything that has happened has helped us get to where we are today. We have learnt important lessons that we use to continue to grow and scale.
Who is your role model?
Sanad Yaghi: Oliver Samwer, founder of Berlin-based tech incubator Rocket Internet.
Ali Al Sayegh: Khaldoon Al Mubarak, chief executive and managing director of Mubadala Investment Company.
Shadi Joulani: Fadi Ghandour, co-founder of Aramex.
Where do you see yourself after 10 years?
Sanad Yaghi: As the only solution any small business needs to operate their business.
Founders:+Sanad Yaghi, Ali Al Sayegh and Shadi Joulani
Number of employees:+140
Sector:+B2B Vertical SaaS(software as a service)
Funding stage:+Seed round
Investors:+Global Founders Capital, Colle Capital Partners, Wamda Capital, Plug and Play, Comma Capital, Nowais Capital, Annex Investments and AMK Investment Office