How To Achieve (And Sustain) Triple-Digit Growth For Your Online Enterprise
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When we launched Yaoota in late June 2014, it was a unique moment of excitement. We had been building the product day and night, focusing on small details, striving to build a shopping engine that adds value in the fragmented landscape of ever-increasing online shops.
One number has likely become of significant importance in our lives since: user traffic. Post-launch, in August 2014, Yaoota attracted roughly 25,000 visits. Fast-forward 36 months, and the number stands at more than 6,000,000. Together with the recently acquired phone comparison platforms Mobilesgate and Mobihall, Yaoota has become the largest product discovery platform in the Middle East and Africa by traffic.
Three years post-launch, it’s moving Gross Merchandise Volume (GMV) worth more than EGP100 million (which is around US$5.5 million) annually, with an average year-on-year traffic growth of 600%+, serving users in Egypt, Saudi Arabia, United Arab Emirates, Nigeria and Kenya.
Hitting triple-digit growth is challenging, but sustaining it even more so. Particularly in e-commerce, with fierce competition from well-funded big players who spend millions of dollars in marketing each month, a well-rounded strategy is required to grow at such rates. Here’s how we went about doing it at Yaoota.
First, we prepared our infrastructure for growth. Growing at a high rate can easily backfire if your technical infrastructure cannot handle the increased load associated. Therefore, we designed our technical architecture early on for scalability in order to grow hand-in-hand with increased traffic.
Second, we focus on the product. While this might not seem to have a direct correlation with high growth, it is -in fact- the core of it. Growth is spurred by loyal users who keep coming back to use your service. This can only happen if you listen to their feedback, and do your best to keep improving their experience.
Third, we are building a brand. Recognizing your service is key for building a core recurring user base. Building a strong brand by building a community around your service fosters such a recognition, and hence, traffic numbers.
Fourth, we do not purchase traffic. The vast majority of user traffic is organic and direct, and we do not spend on direct traffic acquisition. When we spend on marketing, we rather spend on brand and community building, in addition to SEO. Direct-click acquisition produces traffic with high bounce rate and barely returning users. Plus: you will hardly be able to match heavy spending by deeppocketed big players.
Fifth, we have grown by acquisition. In mid-2017, Yaoota has acquired Mobilesgate and Mobihall, the two largest phone comparison platforms in the Arab world. The acquisition has, in essence, increased Yaoota’s footprint six-fold, and doubled revenue and GMV.
Understanding acquisitions in the online space
Buyouts can boost your website's traffic- but you need to be smart about them
Acquisitions usually fall under two categories: horizontal and vertical. A horizontal acquisition involves a case in which acquirer and acquiree both operate in the same market -being potential competitors pre-acquisition- for the purpose of increasing customer base, leveraging synergies, and/or expanding product portfolio. A vertical acquisition describes a case in which a company integrates with one or more entities in its supply chain (e.g. one of its suppliers) as part of a process to streamline operations, and improve efficiency and cost structure.
In the online domain, horizontal acquisitions are more common, as they provide the acquiring online platform with access to users of the acquired website/application, typically with the aim of rapid growth. As it is the case with Yaoota’s acquisition, we managed to serve a new audience that is keen to get price and product information online, hence adding value for both entities: Yaoota and the acquired portals.
This type of buyouts, as opposed to gradual investment in brand and user acquisition, provides a near-instant growth in traffic. This does not, however, assume that every acquisition is bound to be a successful one. You can hardly predict whether the anticipated growth effect would kick-in as planned, as there exist several unknown variables in the equation. Here’s what we did at Yaoota to minimize acquisition-related risks.
First, we took time analyzing the targeted portals. In fact, we took over a year following their numbers closely, analyzing their audiences, and connecting with them in person to understand their business and operation in detail.
Second, we made sure that we are targeting the right audience. That is, as part of the process of understanding the business of the targeted portals, we focused on answering the question of whether their audience fits as part of Yaoota’s user portfolio, or whether such an audience would feel alienated when using Yaoota’s services. More importantly, we asked ourselves the question of whether Yaoota would add value for such audience, or not.
Third, we conducted a cost-benefit analysis. We constructed a model to predict projected growth figures post-acquisition, in addition to projected cost, to calculate whether -and if yes, when- we would see a positive return. Within this context, it’s paramount to study the effect of the extra traffic on key performance metrics.
Fourth, we started with the smaller acquisition. Mobilesgate was clocking in a fraction of Mobihall’s traffic. Hence, we chose to acquire it first, and took time to analyze the impact of the acquisition on our key metrics. Subsequently, we fed our cost-benefit model with the results, and inflated the numbers to reflect the difference in size as compared to Mobihall. As both portals attract a similar audience, this way, we had a good projection on what to expect if we acquire Mobihall, the bigger brother.