Tejari.com, the Middle East's largest business-to-business (B2B) marketplace, has made a mark in the fast-expanding world of online procurement. The company has grown leaps and bounds in the first seven years since its inception, recording 30 per cent growth in online trading transactions to cross the $5 billion (Dh18.3bn) mark last year. Offering 15 per cent saving to its members, the company is expanding its operations to South Africa, South America, Asean and other emerging markets this year, which would transform it into a truly global company. Tejari boasts big UAE names such as its Chairman Sultan Bin Sulayem, who is also Executive Chairman of Dubai World, and UAE Minister of Foreign Trade Sheikha Lubna Al Qasimi as its board member. Emirates Business spoke to Tejari Chief Executive Officer Omar Hijazi to find out the company's expansion, acquisition and IPO plan.
—Tejari faces no competition because it's the sole B2B portal in the region. How does it motivate you?
—We do have competition. We're facing competition from local and international industry portals such as oil and gas and retail. The idea of connecting people over the internet is gaining momentum and we expect this would result in more competition.
—What is the annual growth rate of buying through Tejari?
—Online trading volume has grown by about 30 per cent between 2006 and 2007 and we see that it's accelerating in 2008 as we enter new territories.
—Do you sign tie-ups with companies in other markets or prefer establishing your own offices?
—We'll have local partners. Recently we signed a deal with the Government of Qingdao, China. We operate in a franchise model by licensing our technologies and resources to the firms we sign franchise deals with.
—When will Tejari go public?
—We do aspire to go for an IPO (initial public offering) but we don't have any time frame line that I can share.
—Can we expect an IPO in the next two years?
—Yes. That is a reasonable time. We have started structuring the company in such a way to go public in the next two years. But we have not decided which stock exchange to list on.
—Do you plan acquisition in e-commerce or other sectors?
—We are looking at acquisitions in emerging markets that will compliment Tejari business. We are a unit of Dubai World. So Istithmar, also a unit of Dubai World, is helping us identify acquisition and expect some of the acquisitions to materialise in 2008.
Our acquisition focus is on emerging markets such a South Africa, South America, South Asia, India, Asean and China and some of the CIS states as they are high-growth areas. We are also getting solicitations from Sri Lanka to Kazakhstan and Argentina; this is the reason why we want to do business with firms from these countries.
But we don't see high potential in the US and Europe because recession is happening in the US and there is a fear of sub-prime having a spill-over affect on Europe. We recently visited China and found even Chinese are shifting their focus away from the US and Europe. We also visited China and Africa and explored opportunities.
—Do you have specific amounts allocated for acquisitions?
—No. We go by the opportunity as and when arises.
—How many communities/members does Tejari provide service to?
—We have about 150,000 members and hope to end the year with half a million. Our membership is growing very fast. We have an aggressive online market plan. So we drive a lot of registration through our online marketing campaign.
—What is Tejari's expansion plan?
—We started in Dubai by providing serves to the Dubai e-Government; followed by other emirates and then in the Middle East. And now we're taking this innovation well outside the Middle East.
We already have presence in Pakistan, Bangladesh and Nigeria. We'll be expanding even further to South America, Commonwealth Independent States, South Asia and Asean regions this year. Year 2008 is very important for us to establish ourselves as a global company.
Last month, we launched operations in China through a deal with a company called Shanghai Mart. The company has a huge warehouse near Shanghai Airport, plus it has 3,000 trustees related to the textile industry and all of them will be on the Tejari platform. We are also looking to launch e-store capability where we can provide customers with service to buy and trade online.
—How much do companies manage to save by buying through Tejari?
—The typical procurement saving is about 11 to 15 per cent, which is significant as this is done through our auctioning platform.
—Are most of the members local, regional or international?
—Well, it's a mix. We have UAE companies and communities such as Dubai Economic Department, Ministry of Finance, Jebel Ali Free Zone and Ras Al Khaimah Free Zone-based companies and many UAE manufacturers. We have a number of different regional and international communities, too.
—The Gulf is slow to adopt online procurement. What measures are Tejari taking to promote it?
—There are two areas – the consumer side and business-to-business side. On the consumer side, we need to inculcate trust and confidence among consumers. For example, internet merchandise buying is quite high in the West at the e-Bay.com and Amazon.com. It's because consumers have full trust in their procurement security systems. Trust is the important factor in the success of e-buying.
Online procurement is gaining momentum in the Middle East for infrastructure and technology exist here. For success in B2B, online procurement is mainly linked to infrastructure development and ERP (Electronic Research Process) system. We see local as well regional companies investing more and more in infrastructure and installation of new security softwares.
We are also trying for internet penetration among our clients. For example, if a supplier doesn't have a broadband connection, we get a connection for them. We do a lot of capacity building for SMEs (small and medium enterprises). We brief them about e-commerce so they can use Tejari services.
We are going to launch an e-readiness programme which is focused on improving UAE's e-readiness ranking. Recently, the country's ranking dropped two points in e-readiness in a World Bank and EIU (Economist Intelligence Unit) report. We are working with DED and other players in the market to improve it. Though, UAE is still rated at the top in the Middle East.
We plan to train thousands of companies as part of e-readiness campaign. This will provide all members the assurances that these companies can trade online. We start this next month and hoping to have an automatic impact on the e-readiness ranking of the UAE. We have already trained 10 per cent of companies in Dubai and plan to take it to 25 per cent this year.
—What was the total value of deals made through Tejari last year and what is the forecast?
—Accumulative from 2001 to 2007, total deals that have been transacted over Tejari's platform reached $5bn last year. We have been adding around $1bn a year. This year we hope for $1.5bn as there is more trading among existing customers. We are trying to motivate customers to move to electronic buying and now some of the companies do 100 per cent procurement online.
—Since deals are on the rise, do you plan to raise the fee?
—No. We have been maintaining our prices steady. In fact, we recently expanded our packages to include more features; so customers are getting more for their money. We want to make as many customers and deals as possible; so we'll not increase the fee.
—What are the new products Tejari plans to introduce?
—We plan to launch 15 new industry-focussed communities.
—How does Tejari maintain its data to ensure security of its clients?
Well, we have very strong security guidelines. Our transaction system is constantly being tested against hacking and physical penetration. In Tejari's seven-year history, there has been no major security accident. We are diligent in protecting customers data. This year, we are concluding ISO security certificate, as well.
—The Gulf is expected to become a common market, what are Tejari's plans to capitalise on this?
—We are offering a cross-border platform. For example, a Saudi company puts up a tender and a Dubai company bids for that; we have already eliminated the borders.
—Do you plan a vertical integration with global portals such as ebay.com and alibaba.com?
—E-Bay is a consumer portal so there is not much synergy there. When it comes to alibaba.com, there is again a synergy problem. Alibaba.com doesn't offer auctioning or bidding facilities. It's doesn't have a transactional tender system.
—Which sectors of industry/business have seen maximum growth on your portal?
—We cater to 42 different industries. We see activities in all them. Bidding on construction, health equipment, pharmaceutical, aviation, services sectors is very high and now we see a lot of hotels also using Tejari platform for procurements.
PROFILE: Omar Hijazi, CEO of Tejari.com
Omar Hijazi has helped establish Tejari as the regional leader in e-commerce, making it one of the most recognisable brands in the industry. Hijazi also sits on the Board of Directors of Dubai World, the holding company that owns Tejari and several other iconic Dubai-based companies, such as Nakheel and DP World. Hijazi has more than 20 years experience working in the ICT industry, with a large proportion of that experience gained from the global centre of the high-tech community, Silicon Valley. Hijazi has led a strategic sourcing programme worth more than $1bn and has brought over $100m in savings to the holding firm – one of the world's largest consumer packaged goods firms. Hijazi has a degree in computer engineering from the University of California, San Diego and an MBA in finance from San Diego State University.