This memo provides an inside view into our successful SAR 30 million ($8m) Series A round, led by Sanabil Investments, a wholly-owned company by the Public Investment Fund (PIF), with participation from Sadu Capital, Iliad Partners, Propeller, and Soma Capital. Unique to our approach, we opted to not publicly circulate a traditional investment deck but rather to communicate directly through this memo. Here, we detail the developments at OTO as of early 2024, offering existing and potential investors a clear perspective on our strategic, progress and future ambitions in transforming the logistics landscape.
OTO has become the leading platform that online businesses and retail merchants use to get shipments delivered - in one place. OTO acts as the Operation team enabler through its OmniChannel management, warehouse management, shipping management and more.
Launched just a week before the lockdown, OTO was timely for businesses transitioning online and seeking reliable shipping partners. While large carriers struggled with overwhelming demand and smaller ones lacked integration capabilities, OTO emerged as the solution. By 2020, OTO was profitable with a small team of eight. Today, we serve over 10,000 businesses, generating tens of millions in revenue, with a team of over 100 working remotely from eight different countries. Annually, we process millions of orders worth billions of dollars for our retail clients.
To give our regional community an insightful look into OTO as a business, helping everyone understand our operations, goals, and the value we bring to the online shipping sector.
Put simply, OTO is to shipping what Stripe is to payments—we simplify the complex world of logistics just as Stripe simplifies payments. Just as any online business needs a seamless payment system, they also require efficient shipping solutions. OTO provides an all-in-one platform that enables businesses to manage orders, integrate with over 250 carriers, and optimize shipping processes with just a few clicks, ensuring that even the smallest retailers can compete on a global scale.
Our mission is to build the shipping gateway of the internet to help retail merchants succeed online.
By “succeed online” we mean turning shipping into a competitive advantage, as customers increasingly expect free shipping and faster delivery times
Amazon and Noon were the biggest influencers of these expectations, as they offer faster and cheaper shipping options. This makes it very difficult for other retailers and businesses to compete, as they lack the volume to negotiate better shipping rates and the technology to process orders efficiently for faster delivery times.
Moreover, the shipping market is very fragmented. Saudi Arabia alone has over 150 licensed shipping carriers. Finding and reaching out to these carriers is a complex puzzle for online merchants. Additionally, shipping rates have never been affordable or transparent, with discounts only offered to those with large volumes or strong relationships with the carriers. Small and medium businesses don’t have this advantage. Since shipping is a transactional process, integrating with shipping carriers has become essential. However, API integrations are complicated and costly in terms of both time and money.
OTO is building the platform to make online shipping easy and simple for online merchants and business owners. We enable them to compete with the big boys by making shipping accessible, simple and affordable to every business to thrive online.
We’re building the infrastructure to simplify shipping, whether from the merchant’s warehouse or its distributed retail outlets, serving both omnichannel and pure e-commerce brands.
OmniChannel brands require the presence of an Order Management System to assign orders to the nearest retail shop based on the customer location and stock availability. Offering its clients the option to get the order delivered in a few hours or having it collected from the store via Click-and-collect feature.
For pure e-commerce brands, having a Warehouse Management System is a must, as all orders are usually fulfilled from centralized warehouses. This system ensures efficiency and flawless operations, helping to avoid returns and high operational costs.
Both types of businesses require Shipping Management Software to ship orders using the best available carrier, assign orders between multiple providers, and measure performance and SLA in real-time. Additionally, some brands deliver orders with their own delivery agents, necessitating a Driver Management System to manage in-house delivery operations. To keep customers engaged and updated, a Customer Notification System and a Return Management System are also needed to enhance the customer experience.
Here are 4 key ideas we hope you take from this memo:
First: OTO is already a substantial business, and is one track to 3X YoY (again) in the next 2 years.
In the last 4 years since raising pre-seed financing – we’ve reached thousands of merchants across Saudi Arabia, millions of their customers, and billions in shipments value. Notably, over 10,000 businesses have used our product and collectively saved millions in shipping fees and operational costs–– in just 4 years.
The best part? Over 70% of our customers sign up, pay for our software, charge their wallet, and ship their first order without the need to speak to any OTO agent! That’s rare in an industry that scales by only using armies of salespeople.
Scaling an SMB shipping software is hard, but we think we’ve cracked the code. It’s hard because they cannot afford to pay much, and inevitable churn at high rates.
The Secret
Aligning interests with our merchants, operating with long-term integrity, and driving expansion revenue. The logistics world is interconnected and reputation is paramount. When our clients succeed, they share their experiences with others.
OTO positions itself as a true partner to merchants by only charging per successfully delivered order, unlike competitors who charge per processed order (delivered or not). This model ensures that our success is tied directly to the merchants’ success, putting us in the same boat on the journey to growth.
We believe in building solutions and products that solve our clients problems! We might not be the best in the market for some products in terms of features, but we definitely have mastered building great user experiences and localized solutions that understand the customer pain.
That’s why we frequently tell people who want to buy our product that another solution might be a better fit.
Second: Our Customers love us
We’re the #1 rated shipping gateway in the region. Our NPS score is above 70, few SaaS businesses achieve such numbers. Our users credit OTO with “providing a comprehensive and integrated shipping solution for my business”, “offering the most competitive pricing I’ve ever seen”, “giving me exceptional and efficient support services whenever I need them”. You can check out some of our customer success stories here.
We’re able to make this happen because our message to our customers is clear: Our fortunes are intertwined, and we only succeed when you succeed.
Third: This is the right team
We have built an all-star team of former founders and experienced leaders. Our team includes builders of the best SaaS and shipping companies in the region, including:
1. Ecommerce is growing fast in MENA region and Turkiye.
The Gulf Cooperation Council (GCC) ecommerce market is poised for significant growth, with projections indicating it will reach $50 billion by 2025. This impressive expansion, driven primarily by Saudi Arabia and the UAE, boasts an average annual growth rate of 17.8%.
2. Internet and mobile penetration
This digital connectivity empowers millions, creating a dynamic and fertile ground for e-commerce and digital innovation, perfectly aligning with OTO’s mission to revolutionize the logistics landscape and expand into these vibrant markets.
This connectivity ensures that OTO can effectively reach and serve a tech-savvy population, driving growth and enhancing customer experiences across the region.
3. OTO has cracked the shipping aggregation market
When we started in 2020, before COVID-19 reshaped the world, the MENA region and Turkey lacked a shipping aggregator, and leading carriers were skeptical. “Why would we work with a middleman?” they questioned in every meeting. Despite the doubts, we held onto a clear vision and an unwavering dream. We dedicated ourselves to adding value for retailers and businesses while empowering the shipping industry with a technological solution to bridge the gap, all without imposing any financial burden on shipping companies.
After two years of relentless effort and millions of orders processed through OTO, carriers began to see the true value of our platform. We unlocked partnerships with various shipping companies, transforming skepticism into collaboration. Today, these companies are true partners, shipping orders faster, easier, and more affordably than ever before with OTO.
Here are the goals for our Series A:
Market Expansion
OTO has set its sights on broader territories, targeting the GCC & Turkey by 2025. The funds will be instrumental in ensuring a strategic and impactful entry into these burgeoning markets.
Customer Acquisition
Customer Acquisition: With the e-commerce landscape in the MENAT region rapidly evolving, there's a pressing need for robust branding, marketing, and sales outreach initiatives. The capital will be allocated to fortify OTO's customer acquisition strategies, ensuring a consistent influx of both SMBs and enterprise clients.
Team Growth
Anticipating a surge in clientele and operational demands, there's a clear need to augment the team across various functions. The funds will be used to attract, onboard, and train top-tier talent, ensuring OTO's service quality remains unparalleled.
Product Development
The dynamic nature of the LogisTech sector necessitates continuous innovation. The capital will facilitate the enhancement of OTO's existing tech stack, foster integrations with an expanded set of carriers, and underpin the development of novel features that further differentiate OTO in the market.
Learn more about OTO story from here:
Join the shipping gateway of the internet.
A big thank you to the On Deck team for the inspiration from their Series A memo 🙏