DigiKala, Iran’s leading e-retailer, has been valued in recent years from $150 million, by the Economist and above; either way the pioneer in Iran’s e-commerce industry continues to lead the market with their “unique combination of e-commerce, video guides and online commentary,” as claimed by its managers.
DigiKala’s story began eight years ago when two brothers, Hamid and Saeed Mohammadi, were looking for a digital SLR camera in Tehran’s electronics bazaar, on Hafez and Jomhouri Avenue. The camera body was new but the lens it turned out was second hand, leading the two Mohammadi brothers to start DigiKala from a small two-room apartment in central Tehran.
The group now has the largest share of any online store, scoring an impressive ranking of 6 in Alexa’s online ranking for Iran. Surprisingly the group also ranks in the top 700 of all website internationally, with the majority of their visitors being male and having a university degree. What is most surprising is the rate of growth the company has seen in recent years.
In an exclusive interview with the Financial Tribune,Hamid Mohammadi said he thought his company was in comparison to his competitors’ similar offering. “It’s through our combination of the Amazon like storefront, and our forum like community that we have return customers. We currently have over 90 percent of the online shopping market, with our competitors, like Chare, Albasco, Final and Bamilo (believed to be owned by Rocket Internet), trailing with less than 10 percent.”
When the Tribune pointed to DigiKala’s website design, Mohammadi mentioned his company has its own internal team of programmers, developing both website and mobile application, along with its staff doing expert reviews in the Persian language.
Mohammadi said his main depot in western Tehran operates on a 24 hour basis, even throughout weekends. “Our fulfillment center is one of the most efficient and orderly in all of Iran, and maybe even the region with the capacity of more than 20,000 orders per day.”
The CEO also pointed to his company’s gradual roll-out around the country. He said they now have distribution centers in over two dozen cities, “with free next day delivery outside of Tehran.”
What was apparent when the Director mentioned this point was the complexity of deliveries in a large country like Iran. Mohammadi said that local motorbike couriers are their main delivery method.
When asked why they chose this traditionally more expensive method over regular post, he said, “Believe it or not in the Iranian market this is the most efficient system and also the quickest. We believe that we have built a good relationship with buyers by offering daily deals, and services like free gift wrapping.”
Mohammadi then moved onto his company’s plans for competing in a post-sanctions environment. He said he believes his company is in a pretty confident situation and with their overall plans for growth; they should be able to see off any competition in the near future. He added that even if US companies were to enter the post-sanctions environment, he personally believed that, due to their success in Iran, DigiKala, could in fact deal with any outside competition.
“I honestly believe when the time is right [in the not too distant future] we could move into markets like Azerbaijan, Iraq and Afghanistan,” he said, adding that he was willing to expand to regional countries before the end of this Iranian year (ending March 20).
These three markets he pointed to would be generally easy for his company to enter seeing the historical links and cultural similarities to Iran.
“Content will remain our core value as we expand our business into other categories,” Mohammadi said. He wasn’t willing to divulge which areas he is going to transform next, but traditional retailers may have a large surprise.
When asked if he was willing to list DigiKala on the Tehran Stock Exchange (that would make it the first online retailer ever to do so, and hotly anticipated), he replied, “When the time is right, we would definitely consider this as a possibility, but many people in Iran believe that a company that isn’t a large factory isn’t a valuable company. It’s a mentality, a problem that some people have.”
“But if sanctions are removed, I think Iran’s risk will decrease and [it] is likely that people can consider investing in many companies here,” he commented on the ongoing nuclear talks between Iran and six world powers, an agreement that could lead to the lifting of sanctions against Tehran in a matter of months.
Mohammadi concluded by saying, “We think we are still are a startup company and hope to keep that momentum going further. We are growing fast, we’re not corporate guys, we still have our startup mentality and that’s what keeps it exciting.”
