Egypt’s YFS gets $7M to scale its on-demand logistics and delivery business across MENA
On-demand delivery in the Middle East and North Africa is estimated to reach $47 billion by 2030. In its largest and fastest-growing economy, Egypt, many platforms operate in different segments of e-commerce and logistics while serving businesses and customers.
Today, one of those companies, Yalla Fel Sekka (YFS), whose business involves building a network of dark stores and micro-warehouses across Egypt, has secured a $7 million Series A round.
YFS was founded by Khashayar Mahdavi and Yasmine Abdel Karim in 2020, just before the pandemic struck and customer behaviour shifted toward needing faster deliveries due to pandemic-induced lockdowns.
With increased customer activity, e-commerce companies in North Africa sought to adopt trending models such as quick commerce pioneered by Gopuff, Gorillas, and Flint. But unlike the West, Egypt’s e-commerce infrastructure isn’t ready to accommodate the crazy demand and chaos that quick commerce brings.
It’s one of the reasons Mahdavi and Abdel Karim started YFS. On a call with TechCrunch, the founders said while identifying a critical gap in the regional market: the need for near-instant deliveries, YFS has assembled a distributed network of small mini-warehouses and dark stores, where businesses can store the goods very close to their customers to ensure quick deliveries.
Here’s how the platform works in a nutshell. It’s a B2B2C delivery logistics play where the company integrates to the backend of a client, say a supermarket, so whenever a customer makes an online order, it picks up the order from a dark store built to keep its clients’ products and makes the delivery.
The platform also provides a broad fleet and dark store and micro-warehouse management serving businesses across multiple verticals, including groceries, pharmacies and e-commerce.
“Being able to marry operational excellence and innovation with the technology to bring down your cost and have productivity gains is what sets us apart,” said Khashayar Mahdavi, co-founder and chief strategy officer to TechCrunch.
“And because of our economic and finance background, we’ve always been super focused on unit economics. So that’s what we’ve tried to achieve here, bringing innovation into this space with a focus on productivity and unit economics, and having this distributed logistics services to be able to serve our customers extremely quickly.”
YFS has a fleet of 1,000 active drivers of motorcycles and vans, with more than 3,000 on a waitlist. These drivers make 10,000 orders daily, said CEO Abdel Karim, adding that the company’s gross merchandise volume is growing at a monthly rate of 20% and customer retention rate above 90%.
She also said YFS has completed two million deliveries across five cities in Egypt — Cairo, Giza, Alexandria, Mansoura and Tanta — all the while being gross margin positive, all in 18 months.
Millions of small businesses in Egypt are just coming online for the first time. But for most of them, fulfilling orders remains a challenge. YFS sees this segment as its next batch of customers, although it has predominantly served big clients such as Spinneys, Vezeeta, Jumia and Noon.
“We are working on also serving multiple different businesses and even SMEs. We have a very advanced technology that will easily integrate with anyone. And that’s also a key advantage for us because we can help SMEs come online and help with their logistics arm while they focus on the product,” she said.
The founders, who have economic backgrounds working in investment banking and oil and gas, received $2.5 million as seed money from Flybridge Ventures and I Squared Capital. These investors backed the company again in this round, including lead investor DisruptAD, ADQ’s venture platform and Kuwait-based Kharafi Group.
YFS will be deploying the new funding to expand its presence in cities across Egypt and the MENA region. Abdel Karim said the company would also expand on its dark store management as it looks to build 20 to 40 dark stores in the coming year,
For Mahdavi, now that the company has a proof of concept, it’ll enter a solid growth phase.
“What’s important to say is anything that has to do with quick commerce or instant delivery requires a new form of infrastructure on the ground to be close to your customers, technology, operations,” he said. “All of that is radically different from the type of infrastructure we saw when we were not dealing with quick commerce. But now this is what it is all about for YFS, to become the main player and the leader of offering these logistic services for commerce.”