Inside the fall of Awok

Awok founder Ulugbek Yuldashev
Last week, Dubai-based Awok.com confirmed in a statement on its website that it had shut down, and speculation swiftly began on what caused the e-commerce startup’s demise. The development coincides with a boom in the e-commerce sector globally and in Middle East and North Africa (Mena) on the back of Covid-19, but according to Awok’s statement, it was the pandemic that caused its failure. Founded in 2013 by Ulugbek Yuldashev, Awok grew to attract over 10 million visitors per month, offering about 70,000 low-priced products across over 30 categories in UAE and KSA and employing more than 700 employees. On the surface, it appeared that the startup was doing well or at least on the right tracks after announcing a $30 million Series A round back in April 2019. But the company was unable to survive and blamed the global crisis for shutting down its operations. “Awok's journey as a mass market e-commerce player has unfortunately come to an end, and the company has ceased operations… We are sad to inform you that given the current global situation it left the company no other choice than to close its platform for good,” the statement said. The $30 million funding round was aimed at realising ambitious growth plans, improving customer experience and attracting more talent to the team and was jointly led by StonePine Ace Partners and Saudi Arabia’s Al Faisaliah Ventures with participation from Endeavor Catalyst. But it is unlikely the company received the full investment amount, as it was dependent on achieving various milestones. At the time of the announcement, Yuldashev said: “Our success was built on providing our customers with the best experience we could, and with this round of financing we will be able to provide an even better experience to an even larger market.”
Al Faisaliah Ventures had pinned its hopes on Awok becoming the region’s next unicorn. Alejandro Carbon, chief portfolio officer of Al Faisaliah Ventures said at the time of the investment round: “The e-commerce space in the region is set for exponential growth in the coming years. Awok.com is ideally positioned to capitalise on that growth... The Al Faisaliah Ventures team scanned the market for the best end-to-end e-commerce capabilities – from sourcing to last-mile delivery – and found Awok.com to be right player to become the next unicorn while supporting small and medium retailers in the region entering online space.” 
However, customer experience remained constantly poor throughout the company’s life pre and post the financing round until the shutdown. From users reporting fake, damaged, refurbished or poor quality products to below average quality of customer service, the company’s rating online had been negative since inception. “It was never related to Covid-19 at all,” Hussein Khafagy, head of customer experience at Awok, told Wamda. “It was cash mismanagement, we haven’t seen any sign of the funds in reality. The whole situation spoke to bad management and leadership.”
Following the funding last year, a wave of mid- to senior level hiring was made to improve overall operations and customer experience, this is when Khafagy came onboard. “There was an untrusted relation between the investors and Yuldashev, investors were backing out in January, despite the earlier news reporting the financing was secured. The funds were conditioned to specific KPIs and the cash was not available for us to work with,” says Khafagy. He says that Yuldashev told the team earlier this year the whole investment was not secure, and instructed them in January – before the Covid-19 situation erupted in Mena – that they needed to work to breakeven by cutting costs. This led to salary freezes from February onwards, pushing staff members to quit or request unpaid leave. The company’s debt reached over Dh60 million for outstanding bills for suppliers and partners since December 2018, “the outstanding bill for Posta Plus alone was Dh800,000. There were talks of acquisition lately by big names, who refused to go ahead with any deal when they became aware of the size of the debt,” says Khafagy. Awok’s website was up and running this whole time. Orders were coming in and the payment gateway was running but the orders were not fulfilled with no pathway for refunds. “Yuldashev refused to shut it down. Our emails were down and we were using our personal accounts. We communicated to him that people were complaining they were paying for orders and not receiving anything.”
The team in India went on strike and many filed cases against the company. “We came to know that the C-level execs were receiving their full salaries up until the last day. Employees tried to push news about what was happening, but the stories were either removed or blocked a day after publishing,” says Khafagy. There was no communication with the staff according to Khafagy, and no one internally knew the statement was going up on the website. Wamda cannot verify Khafagy’s claims, but they are in line with claims that other employees have made. Requests for comment were sent Yuldashev and other senior executives at Awok but none have responded.

Awok’s failure: Pandemic victim or cash mismanagement?

by MENAbytes
source: Pexels
Dubai-based ecommerce platform Awok has shut down just a little over a year after raising $30 million in one of the largest investment rounds for an ecommerce startup in the region. The development was first hinted in a Reddit thread started by a Dubai resident on Saturday and earlier this morning by Omar Kassim in a series of tweets. Awok has just confirmed that it has in fact shut down in a statement posted on its homepage. “Awok’s journey as a mass-market e-commerce player has unfortunately come to an end and the company has ceased operations,” reads the statement. Founded in 2013 by Ulugbek Yuldashev, Awok was an ecommerce platform focusing on low to mid-income segments in the United Arab Emirates and Saudi through the sale of ‘affordable’ products – products that sometimes were priced as low as AED 1 ($0.3). Ulugbek had started Awok with $30,000 of his savings and three employees. He had largely bootstrapped the company until April 2019 when Awok raised $30 million in its first external investment round. Awok at the time used to offer over 70,000 products across 30 plus categories products and had its own fulfillment center and logistics. Awok in the statement posted on its website cited the current global situation as the reason for shutting down. It said that the company had no choice due to it and had to shut down the platform for good. We’ve also tried reaching out to Awok’s founder and investors to learn more but haven’t heard back from them.

Dubai’s Awok Shuts Down Just A Year after Raising $30 Million Series A

0 Comments
Get daily business news from the region delivered straight to your inbox
I agree to the terms and conditions
SIGN UP
by Zainab Mansoor
UAE-based e-commerce portal Awok has ended its operations, seven years after it was established. The platform signaled the global economic downturn triggered by the Covid-19 pandemic to be the reason behind the cessation of services. “Awok’s journey as a mass market e-commerce player has unfortunately come to an end, and the company has ceased operations. After seven incredible years of saving money for our customers by creating regional business and a platform for our suppliers and sellers, we are sad to inform you that given the current global situation it left the company no other choice than to close its platform for good,” a statement on its website read. “The ambition of the company was to bring choice and affordability to everyone in the MENA region by building infrastructure and platforms to enable businesses, but this ambition did not survive the current business environment to come to fruition.”
On the contrary, studies reveal that revenues from e-commerce grew by an unprecedented 71 per cent in the second quarter of 2020 compared to the previous year. According to the Salesforce Q2 Shopping Index, the sector grew by 20 per cent in the first quarter, as the coronavirus pandemic began to impact retail. Traffic to e-commerce sites (37 per cent), conversion rates (35 per cent), and spend (34 per cent) also experienced a historic year-over-year increases in Q2.

UAE e-commerce platform Awok shuts shop

MENAbytes
88 Shares
Dubai-based ecommerce platform Awok has shut down just a little over a year after raising $30 million in one of the largest investment rounds for an ecommerce startup in the region. The development was first hinted in a Reddit thread started by a Dubai resident on Saturday and earlier this morning by Omar Kassim in a series of tweets . Awok has just confirmed that it has in fact shut down in a statement posted on its homepage. “Awok’s journey as a mass-market e-commerce player has unfortunately come to an end and the company has ceased operations,” reads the statement. Founded in 2013 by Ulugbek Yuldashev, Awok was an ecommerce platform focusing on low to mid-income segments in the United Arab Emirates and Saudi through the sale of ‘affordable’ products – products that sometimes were priced as low as AED 1 ($0.3). Ulugbek had started Awok with $30,000 of his savings and three employees. He had largely bootstrapped the company until April 2019 when Awok raised $30 million in its first external investment round. Awok at the time used to offer over 70,000 products across 30 plus categories products and had its own fulfillment center and logistics. The round was co-led by StonePine Ace Partners (which is a joint venture between two private equity firms – Dubai-based StonePine Capital Partners and Geneva-headquartered Ace & Company) and Al-Faisaliah Ventures, the VC arm of one of the leading Saudi conglomerates Al-Faisaliah Group. Endeavor Catalyst had also participated in the round. MENAbytes has spoken with multiple employees at Awok all of which have confirmed that the company has had been in crisis since the start of 2020. All of them have told us that the employees weren’t paid salaries since January and the majority of them left the company in March. The employees who spoke to us have also told us that the employees who left this year did not receive their end of service benefits as well. Some of the vendors of the company were also not paid their dues, the former employees of the company told us. The online reviews of Awok on Trust Pilot suggest that the company was not fulfilling the orders of customers in spite of receiving payments. “My order was auto-canceled on July 4 but until now my money has not been refunded despite numerous calls and follow-ups. Please refund my money,” reads a one-star review posted about Awok on Trust Pilot on August 4. There are multiple other similar reviews highlighting the same issues. Awok in the statement posted on its website cited the current global situation as the reason for shutting down. It said that the company had no choice due to it and had to shut down the platform for good. The employees who spoke to us (before the statement was published on Awok’s website) had blamed company’s leadership for the failure. They pointed out that the company did not manage the funds (it had raised) well, made some poor decisions, and took too many unnecessary risks. Awok’s fall is one of the biggest failures of a startup in the Middle East & North Africa. There are very few startups in the region that have raised this kind of money and have gone bust. Fetchr that was on the verge of bankruptcy last year was saved by $10 million in emergency financing. It has been trying to turn things around and has just received $15 million in fresh capital. The failure should also serve as a reminder to everyone in the ecosystem who equates raising money as the success of a startup that it’s not the case and Awok is another proof. We’ve also tried reaching out to Awok’s founder and investors to learn more but haven’t heard back from them.

Dubai’s Awok shuts down just a year after raising $30 million Series A

Jobrapido

eBay

OC & C France

Xperi

Magrabi

Rocket Internet

224 of the biggest, costliest startup failures of all time

406 startup failure post-mortems

E-Commerce

AWOK.com is a mass market e-commerce company offering affordable products in the UAE and KSA with a mobile-centric approach.

Name	Work History	Title	Status
Ulugbek Yuldashev		Chief Executive Officer	Former
Denis Khalip		Chief Financial Officer	Former
Sridhar Krishnan	Jobrapido, eBay, OC & C France, and Xperi	Chief Financial Officer	Former
Bilal Shahwani		Chief Technology Officer	Former
Manuela Melinescu	Magrabi, and Rocket Internet	Chief Marketing Officer	Former

Name	Ulugbek Yuldashev	Denis Khalip	Sridhar Krishnan	Bilal Shahwani	Manuela Melinescu
Work History			Jobrapido, eBay, OC & C France, and Xperi		Magrabi, and Rocket Internet
Title	Chief Executive Officer	Chief Financial Officer	Chief Financial Officer	Chief Technology Officer	Chief Marketing Officer
Status	Former	Former	Former	Former	Former

Wells Fargo Success Story

3M Success Story

Platform Overview

AWOK

Executives

AWOK Management Team

5 Team Members

Discover the right solution for your team