Last week we shared with you an update from Ecomz, the Lebanese award-winning eCommerce platform that has been jockeying to keep up with demand driven by the Covid-19 outbreak. This week we are bringing you insight from another TIP alumnus, beauty products ecommerce website Feel22, on how they’re navigating the storm.
“The last 6 months have been a roller coaster,” explained Co-founder and CEO Maurice Mattar. The roller coaster ride he spoke of started on October 17; the company was then forced to halt its activities for two straight weeks. Work did gradually resume following that hiatus, and reached normal levels again in January of this year. Those events, however, meant that the company had missed out on Black Friday and the holiday season shopping sprees.
But over the last month, as more and more people find themselves unable to go out and shop, the company’s sales jumped three fold. So how do current revenues compare to pre-pandemic projections? You’d say that they should be three times higher, but in fact, they’re at the same level.
Unfortunately, the devaluation of the Lebanese Pound took its toll. “Since the currency was devalued by 3x and sales grew by 3x, you can say we’re at the same level in USD,” explained Maurice.
So what happened exactly?
Maurice told me that all suppliers, without exception, increased their prices. “Some have increased by 20% and others have doubled or even tripled to match the currency devaluation,” he continued, adding that the most impacted brands were luxury brands. In response, customers moved towards more affordable brands.
Maurice also lamented the lack of local alternatives. “During currency crises, customers usually turn to local products,” he said. “Unfortunately, there are few local factories in Lebanon involved in the production of beauty products and they have been relying on imported raw materials.” The new currency rate, however, gives him hope that this industry might witness a revival.
Furthermore, another major setback has been the inability to use funds. Similar to other local startups, Feel22 was unable to pay for services abroad – such as hosting fees and advertising. “We’ve had to create a legal setup outside of the Lebanese system to be able to make better use of our funds. This is very unfortunate, because we initially set up our company in Lebanon to invest in the country, its talents, and its economy,” he concluded.
So what other steps did the company take to better its chances? “We had to adapt very fast,” Maurice replied. “We started by outsourcing some of our functions such as last-mile delivery to allow us to have a more flexible structure in case of another slump. We also moved some of our online ad spend which was primarily in USD to local alternatives.”
At the end of our interview, I asked Maurice to describe the post-pandemic business world and how it will be forever changed. Remote-work and cross-border outsourcing will be key, he said. “Some of us are loving it. It saves on cost and relieves us from the stress of commuting. Secondly, when it comes to recruitment, onboarding new hires remotely will be hard at first, but Maurice thinks that we will soon adapt and develop new ways of assessing candidates.
Finally, he imagines that Lebanon’s economical model will change to become more industrial, export-driven, and creative!
Before I leave you, I would like to remind you that TIP is currently accepting applications for its 4th Cycle, which will be held under the theme of Crisis Management. Six high-potential entrepreneurs will be selected as “touch Innovators” and you can be one of them. To access more information on eligibility and to apply, please click here.