Today, two large electronic retailers in Lebanon have decided to merge. Khoury Home and Hokayem Brothers have many things in common. They both have several large branches that sell various electronic and household appliances. They are both family businesses, and apparently they are both not doing as well as they should, hence the merger.
They are also both missing out on a potentially huge opportunity. While they sell cutting edge technological products, they have obsolete websites and they don’t offer you any way of buying their products online.
This is a pity. Lebanon with its short distances, its immense traffic, its sophisticated banking system and its wealthy diaspora is a prime candidate for E-commerce. The idea that you have to drive to some large showroom and get stuck in traffic for two hours to buy a $120 camera is beginning to sound outdated. Who has the time for that anymore?
And yet Lebanese retailers are not adapting. I use my Lebanese credit card to buy all sorts of things from international online retailers. But If I want to buy an iPad for my sister in Lebanon, I can’t login to Khoury home’s website and buy it for her. They are effectively refusing my money.
Considering the fact that most rich Lebanese live outside of Lebanon, there is a world of hidden opportunities that retailers are missing out on. If the new merged entity is keen to survive, it will have to start the E-Commerce revolution in Lebanon..
Update: I made a quick follow up on this post..
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The new Banque Audi Loubnani credit card should solve that problem with its portfolio of retailers. allowing you to buy at a discount, products using your card, which is in lebanese lira (not dollars)
Now if you look at the patners for the loubnani card http://www.loubnanicard.com/index_en.html most of them are in fashion, food and some spas. Although had there been any electronics stores on there, it would be an opportunity to cross sell by referring to the card on the Hokayem /Khoury home websites.
We all know as consumers, that e commerce would work amazingly well in Lebanon, precisely because of the crappy infrastructure that no one wants to get stuck in. Time to buy an ipad, about 10 minutes. Time to get there and back about 1 hour.
the easier you make it for people to buy, the more you sell. This is a huge opportunity for Banque Audi with all its power to properly approach retailers and demonstrate how implementing an e commerce platform benefits everyone. And its widely known that Audi has the best (by regional standard) platform in the Middle East.
Of course, retailers would probably be discouraged by the extra fees they might have to pay, they already have to pay a percentage for accepting card payments instead of cash, however, with the right people from banking, commerce and advertising agency setting up a good trade sales and marketing plan, (disclaimer – i work for Leo Burnett, the agency for Banque Audi) then the payoffs could be huge.
Lets hope this year’s Arabnet taking place in Lebanon can push the envelope
Thanks for the comment A.
retailers would probably be discouraged by the extra fees they might have to pay, they already have to pay a percentage for accepting card payments instead of cash,
Don’t you agree that this is extremely short sighted? These guys will go to extreme length in legal work for mergers, but they won’t even consider the vast world of new options online retailing can offer them. Hell they can even start selling to customers in Syria and jordan if they have the imagination and will to sign deals with the likes of Aramex.
of course. 100% and with Aramex opening up its API’s to allow anyone with half a brain cell operating an ecommerce site, its a no brainer: http://goo.gl/baIfq
Hasan – you should comment on this
Aramex API’s are now as easy as pie and good to go for all etailers using our delivery solutions…they cover domestic deliveries and cross border (International)….API’s accessible once a business account with Aramex is created…basically…any M.E. based etailer can go global…no excuses what so ever…free to talk about this anytime during ArabnetMe.
Very valid and simple point. It’s really sad that they cannot see the potential behind ecommerce… we already have the check out process ready, everything is there, very easily to implement security wise and technically, virgin did it! now I don’t like their online booking system THAT much, it could be much improved, but it’s better than nothing.
E-commerce is crucial, it helps us thrive in the competitive global market especially that Lebanon does not have the ability to compete with international manufacturing giants. Our primary production lies in service industries. That’s the good thing.
We have the right focus and the means to compete online especially when it comes to e-commerce. Thousands of students are graduating in advertising, design, media, computer sciences, and complementing majors and those fresh thinkers have so much to offer to the Lebanese and global economy.
However, local businesses and their key decision makers come from another era. They cannot abandon what they have learned and what has been working for so long, neither can they submit to a wave of change that they cannot fully grasp and comprehend.
This is where innovators can invest by grasping the opportunity and a market share first-hand.
Mizalla.com is working on e-commerce and online shopping solutions that are tailored for the Lebanese market. We’re still experimenting and we’re sure it’s going to be a blast. I’ll keep you posted as soon as we’re out and kicking.
Just a clarification, Hokayem Freres is a family business (now divided into many parts) but Khoury Home looks to be a family business, but behind the scene they are not, they have a big potential investor pumping money in the business, thus their power to make better deals then Hokayem Freres and Abed Tahen & Sons.
Lately (since early 2010) Hokayem was having internal and external problems (preferably not mentioning them in public, for ethical reasons), but Khoury Home did not have this problem, i read about the merger on BeirutSpring Blog, but i would consider it more as a buyout than a merger.
now as for e-tailing and e-commerce issue, both of them are way behind this concept, because what counts for them is the CASH and as they say cash is king. So i don’t think people managing companies have enough vision to create this niche market, knowing that they can lead it by far because of the purchasing power they have (mainly Khoury Home) and for most Lebanese, it is very important to go to the store and touch the product even if this is gonna take them 3-4 hours on the way.
Another example is GetForLess which almost history now, it was somehow the 1st mail order service in Lebanon, now you barely hear of them and i don’t even receive their printed catalog in my post box.
To conclude, Lebanon is still not a mature market for e-commerce, specially that the cost of micro-payment and deliveries are considerably high priced.
Audi E-payment, or Ourjouwane’s solution? it will cost you an arm and leg to set up an ecommerce.
Google checkout does not support Lebanon yet (retailers). Paypal stinks. Moneybookers is even worse (long and complicated validation process).
Lebanese ready for e-commerce? definitely not. If I could only publish the online behavior of Lebanese people online, you would be surprised to what most do online.
Just because a few of us do shop online, it doesn’t generalize to the rest.
The would jump on the bandwagon if there really was an opportunity to do so.
In Lebanon, whether we want to accept it or not, there is no potential for even MODERATE profits from ecommerce.
it’s just the way it is for the time being! (FOR THE TIME BEING).
It’s all about education and social behavior.
I just want to politely disagree with Krikor and UxSoup,
With all due respect, you will never know if the market is “niche” or important unless you actually try to get into it.
For example, to the two companies, there was tremendous cost in Legal expenses to let the merger go through. But they did it nevertheless because they have hope that this will eventually lead to better sales.
Why not take the same chance with e-commerce? It won’t cost them that much..
@BeirutSpring
Mustapha, you are 100% right, but there is something missing that maybe you are not aware about, it is the “trader” mentality or to put it in a more flashing term “dekanjiyeh”, which means i have heard many of them saying: “i have a store and i have a stock, let them come and buy, pay me and leave, end of story.”
You are putting it in a way, as if they are aware that E-tailing is something important and they should have it. Yes, they are willing to spend lots of money in legal expenses to merge, but it will take a lot to convince them spending some money on their website (keeping in mind that most of their store design, branding, and billboard campaign are supported by the brands principle locally or from their regional offices) and i am sure they can get extra cash for the site.
Another side subject somehow related, it took the banks forever to convince some big chains and stores to start accepting credit/debit cards because of the percentage taken and some stores still believe in cash business and wont change.
I am not sure about the cost of a decent e-commerce site in Lebanon, but surely most of Lebanese companies are not willing to invest.
Next time you are in Beirut, let us have a coffee and i will tell you some facts that i cannot do here
@_khaled
I guess you are living outside Lebanon and there are lots of harsh realities around here that you have to face.
When i said Getforless is not in my mailbox anymore, i meant that they had to shrink their expenses and started printing less copies because things are not going the right way, also take a look at their website, you feel you are back to 1995 and this was supposed to be a prominent business.
Unfortunately, some people around here still believe in the “cash is king” theory, another Lebanese reality.
For Hallab, maybe this family or families (there are many Hallabs) realized that they have something the others don’t and they pushed it forward, plus not all products categories are comparable.
@Pascale M
hopefully this time Mizalla will be doing it in a different way, as all the previous trials ended up shutting down.
Who is effectively behind Mizalla.com?
@beirutspring thank you for bringing up this topic. I have been keeping a close watch on this specific channel (e-commerce) in Leb and wondering the same thing
@Alex T that is JUST the type of thinking needed to drive business to embrace the potential behind online shopping
@Pascale M: I impatiently await to see the results of your venture. The need for this type of conglomerate is way past due, and I hope you guys are successful on your venture
@Liliane you picked an extremely tricky product/service (ref. ticketing). I would say Virgin can not be an indicator of true e-commerce in Leb as long as they are the only player (with true power to control price/supply).
Btw, in the US you only buy your concert tickets online. And the biggest online retailers/players have merged.
@Krikor I have to respectfully disagree on your argument considering the a major gap in this logic. Are we saying that since Get for Less is not delivered to your mailbox then this is an indicator of lack of market maturity?
Why not slap Moricco TV shopping on top of it as an example, then?
As for “Cash is king” –> This is the kind of thinking that is rendering Lebanon as a laggard while its neighbors improve their digital infrastructure.
How is Al-Hallab (palace of sweets) [a family business nonetheless] able to ship their products to Lebanese consumers in Europe and the US?
@uxsoup: ref. online behavior: you make a solid point. & i do not doubt the validity of your information.
But let me point you to a different view of what you are saying:
claiming that e-commerce will not thrive in Leb because people use the internet in a trivial manner, is like saying parents will never invest in the education in a child whom they believe is not bright and wastes their time playing games.
You don’t think if storefronts offered exclusivity, and couriers supported local businesses (coupled with the local development talent needed to make a decent online consumer experience) that business can actually sell locally?
Not even internationally (to Lebanese living abroad, that actually have decent internet connectivity, and the need to ship gifts to friends and family back home?)
Everyone – Face the facts: people will always shop, and will always look for better deals. In the long run, the companies that are resisting digital storefronts are going to appear very small in the rearview mirror of those firms that are able to own this channel.
@_khaled
I guess you are living outside Lebanon and there are lots of harsh realities around here that you have to face.
When i said Getforless is not in my mailbox anymore, i meant that they had to shrink their expenses and started printing less copies because things are not going the right way, also take a look at their website, you feel you are back to 1995 and this was supposed to be a prominent business.
Unfortunately, some people around here still believe in the “cash is king” theory, another Lebanese reality.
For Hallab, maybe this family or families (there are many Hallabs) realized that they have something the others don’t and they pushed it forward, plus not all products categories are comparable.
@_Kaled exactly! I said it’s not the time YET. Will I be ordering? I definitely will. Am I excited to see someone doing so? freakin’ yeah. Will expats be ordering too? I am dead sure they will. Exotica’s online ordering relies on expats and it’s working just fine (expats!)
I am hoping the logistics are not costing them too much (Mizalla) (I personally helped on setting up 2 in the region and it COSTS!) and they can sustain themselves for a year or two.
They need to find a new business model to serve the Lebanese market.
One of the reasons why Get For Less failed is really, REALLY bad marketing and follow up and what looks like “je m’en foutisme”
and just to be fair…I am employed by a leading North American e-commerce and online performance marketing solution provider. I spend the majority of my day helping build and managing online storefronts for business ranging from small shops to fortune 500 brand names.
Guys, thank you for this.
To a certain extent, we all have a valid point of view. There are so many problems with Lebanon’s e-payment infrastructure and there are no facilities whatsoever, let alone practical international online payment gateways.
But it’s good to dig into the market and “own this channel” as Khaled mentioned. We’ve established that there are opportunities in the e-commerce world. The smart thing is to reap the benefits of an open opportunity and tailor it to the market and its problems in order to create solutions.
For instance, Mizalla will give customers a couple of choices, they can either choose to pay cash door to door or use an online e-epayment system, whatever suits them.
We’ll also inform online shoppers about the system’s convenience. This process needs patience but will slowly and surely help customers develop habits that make life easier.
@Pascale M
hopefully this time Mizalla will be doing it in a different way, as all the previous trials ended up shutting down.
Who is effectively behind Mizalla.com?
Hey Krikor,
We’re a team of digital technology and e-commerce enthusiasts. I’ll send you an ‘about the team’ link as soon as it’s done!
P
‘They are both family businesses, and apparently they are both not doing as well as they should, hence the merger.’
this is misleading info