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RIYAD: KSA sees itself as a leading player in the large and growing race for smartphone applications.
Tamara (with 120 employees) raised $ 110 million in debt and equity financing from Checkout.com earlier this year.
And the HungerStation food delivery app (founded in Dammam with over 1,400 employees) merged with Foodpanda, owned by Germany’s Delivery Hero, for an undisclosed amount in 2016.
With smartphone penetration at over 80% of the population, positioning it third in the world, “Saudi Arabia dominates the use of mobile applications in the region due to its size and purchasing power”, Imad Jaroudi, CEO of Jaroudi Media (a digital marketing company based in Riyadh, Manama and Beirut) told Arab News.
While technology may have been a luxury before COVID-19, it quickly became a necessity
Kholoud Al Mohammadi, startup mentor and investment manager at the FII Institute
“The majority of its population is under 40 years old. These are young and talented individuals who are quickly embracing the new technological age and wanting to be a part of it.
The coronavirus pandemic has been an additional factor in app usage in Saudi Arabia and around the world.
“Sectors normally slow to adopt technology, such as government and healthcare, have been forced by the pandemic to provide their services online,” says Kholoud Al Mohammadi, startup mentor and investment manager at the FII Institute. “While technology may have been a luxury before COVID-19, it quickly became a necessity. ”
Most Saudis can attest to this, as utility apps like the Covid Tawakkaina Passport App and Sehhaty Health Services App have become a staple of everyday life – in addition to the multitude of apps. retail, gaming and social media already present on most smartphones.
Market research firm Grand View Research estimates the global mobile application market at over $ 170 billion and predicts growth at a compound annual growth rate (CAGR) of 11.5% between 2021 and 2027.
But there are some 9 million apps available globally and it counts fast – so how can a Saudi app developer stand out from the crowd and establish a new brand in such a competitive environment?
It takes more than a good idea. Initial development costs range from SR 60,000 to SR 150,000 with some e-commerce applications running into the millions. But building the app is only part of the story, and many potential innovators aren’t fully aware of it.
“If someone asks me to help develop an app, I’ll first see if it’s just replicating a lot of other apps,” Jaroudi explains. “After all, why spend time and money on something that already exists? Then I will ask questions about the feasibility study. Someone can come up with a good concept, but they want to get started right away, without any market research or thinking about budgeting and management.
If anyone asks me to help develop an app, I will first see if it’s just replicating a lot of other apps.
Imad Jaroudi, CEO of Jaroudi Media
Khurram Ali, CEO of Riksof (a Gulf-wide app developer), agrees, noting that the viability of an app “is primarily about execution. You start with an idea – it’s a problem I see and it’s my solution. But execution is how you bring your idea to market: having a fast, streamlined app that delivers clear value – but then managing customer service, managing cash flow, and raising the funds to get you through. point where your product takes root. ”
No innovator will have all of these skills or the ability to multitask. Therefore, an application developer needs to have a strong team from the start, and that includes IT talent. For a while it may be tempting to outsource all development to a low cost region like India or Pakistan, this presents a risk that the management team does not fully understand their own product – a painfully shortcoming. obvious when looking for additional investments.
Even with sound management in place, a solid feasibility study and business plan, and a unique offering that delivers real value, an app can still receive negative feedback if its functionality is sub-par at first.
Ali wants to be reassuring on this point. “It happens all the time,” he says. “You get bad reviews and improve the app based on that. The first version just can’t be perfect – but if you respond to these negative reviews, you can improve your solution and grow your business. Someone can install and then remove your app, but reinstall it six months later if it’s recommended by a friend.
And based on customer feedback, the app may change in unexpected ways. Flexibility is therefore essential. For example, Dubai’s Careem – a regional unicorn – started out as a corporate car reservation solution, and evolved into taxi services, then food delivery. Careem (with more than 1,000 employees, not counting “partner” drivers) was acquired by Uber in a $ 3.1 billion transaction in 2019.
The application space is undoubtedly difficult to break into, in Saudi Arabia as elsewhere. But it is a growing, multi-billion dollar online industry. With a smart approach and with lessons learned from the successes and challenges of others, there is still plenty of room for new innovative players.