Floward was founded by Abdulaziz Al Loughani and Mohamed Al Arifi in 2017. The Saudi Arabian start-up has more than one million users today and is bullish on growth as online buying continues to pick up amid high internet usage and rising popularity of digital payments.
The Riyadh based start-up delivers flowers and gifts across the Middle East and North Africa region, as well as to the UK.
“Gifting is very much embedded in our value system, religion, culture … even if you go to the poorest person here ... they always want to genuinely be generous with people around them,” Mr Al Loughani, who is also chief executive and chairman of the company, says.
“That intersection between gifts and e-commerce has been a blessing for us and is a key driver [for] our growth coupled with great execution and user experience.”
The Mena e-commerce market reached about $37 billion last year as the use of digital channels expanded, according to a recent study by EZDubai, an e-commerce zone in Dubai South.
The figure is 16 per cent higher than the $31.7 billion recorded in 2021, and is projected to reach about $57 billion by 2026, expanding at a compound annual growth rate of 11 per cent.
The growth is a result of higher internet usage, the rising popularity of digital payments platforms, as well as expanding technology sector initiatives, the study found.
In 2017, the market size for the flowers business in the Gulf region was valued at $1.5 billion. Since then, Floward has invested more in its gifting vertical, which is valued at $10.5 billion, with a great potential for growth in the segment, according to Mr Al Loughani.
“2020 is the year where we invested heavily in our expansion across the region. Obviously, Covid served us well and we were strong beneficiaries from e-commerce penetration rates doubling in the region,” he says.
The Covid-19 pandemic, which led to lockdowns around the world, hastened the move to digital services as consumers switched to cashless payments and online shopping.
Capitalising on the trend, the company expanded aggressively, adding new gift items to boost sales along with flowers. The company is currently active in nine countries across the Mena region, as well as in the UK.
It is partnering with more than 400 different brands, ranging from accessories to chocolates, cakes, perfumes and more.
“We believe that we have created a strong market position with over a million users from the region,” says Mr Al Loughani.
Despite flowers being a complex business, the company has achieved success in this segment, he says.
“Flowers need to be stored in a certain temperature, delivering them needs to be managed in the best way ... it’s a very sensitive product with a very short shelf life … we demonstrated success from very small humble beginnings.”
The company procures flowers from different sources around the world and ships them to its different fulfilment centres. They need to be sold within 10 days or they will wither and go to waste.
Floward has more than 20 fulfilment centres spread across different cities.
The company continues to expand in its existing markets and aims to boost investments in mergers and acquisitions. Last year, Floward acquired Kuwait-based Mubkhar fragrances to expand its business in the region.
“We announced our first acquisition last year and we expect over the next quarter to have one more acquisition," says Mr Al Loughani.
Floward recently secured $156 million in funding in its series C pre-IPO investment round led by Aljazira Capital, Rainwater Partners and STV, with the total amount raised in the past five years reaching close to $200 million.
Start-ups in the Middle East, Africa, Pakistan and Turkey region raised $7.2 billion through 1,473 deals last year, despite macroeconomic and geopolitical uncertainty, according to a report by data platform Magnitt.
Start-ups in Saudi Arabia recorded a 72 per cent annual increase in venture capital funding to $987 million across 144 deals last year, the report said. The kingdom was the second-most funded geography after the UAE in the Mena region last year.
“I think everywhere you go around the region, there is plenty of developmental money available to help entrepreneurs … today, we have more funds in the region as well that are investing,” Mr Al Loughani says.
However, the region needs more commercial funding to be focused on later-stage companies, he adds.
“We have [a] 450-million population in the Arab world. This is a $3.5 trillion economy and only $32 billion is actually online. There is plenty of room for more industries to be penetrated, more verticals to be converted online and digitised,” says Mr Al Loughani.
He expects more successful start-ups to emerge from the region amid government support as well as entrepreneurial spirit of its population.
“Arabs have proven and even in the toughest and most challenging circumstances, we are still able to produce some of the greatest companies globally,” Mr Al Loughani says.
Ride-hailing company Careem and Anghami, the music streaming rival to Spotify in the region, are some of the successful start-ups from the Arab world that have made a mark globally.
In Saudi Arabia, start-ups and small medium enterprises are being supported “big time” by the government through subsidies and improvement in regulations, according to Mr Al Arifi, who is also the chief growth officer of the company responsible for on-ground country operations.
In 2021, Saudi Arabia said it will provide up to $4 million in loans to technology businesses to boost the country's digital economy and attract new investment.
The Arab world’s largest economy will provide loans ranging from 100,000 Saudi riyals ($26,666) to 15 million riyals to support start-ups and SMEs operating in the technology sector, the Saudi Press Agency reported at the time.
Floward aims to go public next year and is looking to list the company on a regional exchange, Mr Al Loughani says.
“We are already proceeding with different requirements including venue assessments, hiring required advisers, formulating the necessary governance and restructuring the company legally towards what's required,” he says.
GCC companies continue to list their shares on regional stock markets amid an economic recovery from the pandemic.
Middle East IPOs raised more than $23 billion last year from 48 listings, compared with $7.52 billion raised from 20 offerings in 2021. That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.
Between announced and rumoured IPO plans, the GCC region is expected to float 27 to 39 companies this year, Kamco Invest said in a report earlier this year.
Q&A with Abdulaziz Al Loughani, co-founder and chief executive of Floward
What is your mantra for success?
Having the right business model and the right team with the right skill sets, mindset, discipline, and creativity are very important to solve any problem you may encounter.
What new skills have you learnt while setting up your start-up?
We learn every day. I think my biggest learning is probably patience. Keep doing the right thing and have patience. Ultimately, you will get the right result.
Do you have any role models?
Our team members are our role models … each team member has different traits, different propositions, different skills, and I really look up to them.
What is your vision for the company?
Our vision is to be the preferred online flowers and gifts destination in the world. We think that we are on the right track to achieve that vision. We firmly believe that we can replicate this experience to different parts of the world.
