Saudi Arabia-based start-up firm Lawazem, an operational procurement company which raised $1.3 million in its seed-funding round last month, is confident to propel the nascent business to business (B2B) ecommerce market in the kingdom to greater heights.

Founded in 2020 by Abdulhakim Albisher and Nasser Alshaya, Lawazem calls itself  a ‘one-stop-shop’, offering a range of services ranging from VIP guest services to procuring office stationery and thereby, decreasing the time, effort and costs of reactive operational procurement.

The new round was led by Merak Capital, a technology investment firm licensed by the Capital Market Authority of Saudi Arabia, with participation from Merced, a Saudi VC company that covers a variety of sectors across the Middle East.

This investment round, the founders said, has come at an early stage of Lawazem’s journey, and will be used to develop its technology as well as establish the needed infrastructure and increase its products and services.

Nasser Alshaya, Lawazem Co-founder (left) with Abdulhakim Albisher

“We believe change is coming, and we just now planted its first seed. We will continue pushing the boundaries and clearly paint the picture of how B2B ecommerce has a big place in the market,” Abdulhakim Albeshir, Co-founder and CEO of Lawazem, told the Gulf Industry, in an exclusive interview.

In less than 12 months, the start-up company claims to have acquired more than 100 clients, driving more than 1,000 orders per month for their different operational needs. It now aims to become the “leading platform” for all operational procurement needs in the kingdom and the wider region.

“We believe we have introduced to the world the first operational procurement eCommerce platform. This puts us in an advantage, given the vast experience the team has in this sector, and the technology that backs this experience. Thus, we are definitely going global in the near future utilising our local and international partners with whom we already have strong bonds, and this is planned to be the result of the coming funding rounds,”Albeshir said while laying out his ambitious plans.

Giving his outlook for the segment, he said: “10 years from now, I believe procurement jobs will be obsolete where entities directly integrate with platforms such as Lawazem and their business units place orders and monitor their spend in an automated AI-driven manners.”

Excerpts from the interview:

Can you tell us about Lawazem’s presence in Saudi Arabia / the Middle East and what prompted you to enter procurement, contracts management market, last year? Do you have plans to expand your domain beyond procurement, say, into manufacturing or any other areas?

The inception of Lawazem came from a pain that we experienced, Nasser and myself, throughout our career and we agreed on the existence of the problem and absence of a minimal solution for it, and the problem intensified by how companies and government entities handled their day-to-day purchases.

Through our research, we noticed that less than 1 per cent of entities around the Kingdom and the region do actually differentiate the policies and procedures of operational procurement from strategic procurement, which resulted in those entities spending more than 75 per cent of their procurement staff time on operational procurement which does not have significant impact on the entity’s goals, while leaving 25 per cent of the time to source, evaluate and contract those strategic procurement transactions which have highest and most critical impact on the company’s service and continuity.

Moreover, also through our research, we found that the operational procurement spend amounts to less than 5 per cent of the entities’ total spend, while 95 per cent is actually spent on strategic procurement, this clearly draws the picture of the problem where entities spending 75 per cent of their time on less than 5 per cent of total spend, which is logically wrong.

What is your business model and how is it different from many other B2B platforms in the region?

Lawazem is an eCommerce marketplace designed specifically to fit business clients’ needs rather than consumers. What further set us apart is the variety of products and services we maintain rigorously on a daily basis and handpick specifically for our business clients. This has made our clients’ pain with operational procurement simply vanish with a click. Further to that, we knew business clients face issues when it comes to payment methods where majority rely on purchase orders and frame agreements rather than simply pay using credit cards. Thus, we came up with perfect payment plans that made our clients’ lives easier.

Can you give us an idea about your clientele in this region? How big is your network? What is the number of transactions you process per month?

In less than 12 months, we have acquired more than 100 long-term clients with agreements to be their sole operational procurement partner ranging from one to three years. Our clients range from small and medium enterprises (SMEs) to private and semi-government companies, non-profit, and government entities. Those clients drive more than 1,000 orders per month for their different daily operational needs.

The B2B startup sector is still nascent and has not yet matured in the Mena region. Why do you think B2B ecommerce has not taken a strong foothold as fast as B2C?

If you look back 12 years ago, the region’s adoption of B2C eCommerce was very low and consumers were hesitant to order and pay online. Compare that to today, where almost everything is shopped online.

The same goes today for local businesses which are still stuck on traditional procurement policies and procedures that focus on decreasing the direct spend on unit items, while the cost is significantly higher indirectly through processing cost, absence of innovation and lots of lost opportunities of improvement just to satisfy outdated policies and procedures.

We believe change is coming, and we have just now planted its first seed, we will continue pushing the boundaries and clearly paint the picture of how B2B ecommerce has a big place in the market.

Globally, manufacturers have been reeling from disrupted supplies, high shipping costs, and the inflation resulting from their combination. How can Lawazem help reduce these problems?

In Lawazem, data is everything. We utilise our artificial intelligence (AI)-driven Business Intelligence to capture the problem beforehand, making our clients less affected by those issues. Additionally, our clients know their operation is not ‘stuck with one product, brand, or manufacturer’. Our variation of products and services allows our clients to shift easily brands and end up with the same result to run the day-to-day operations with minimal impact.

What future trends and predictions do you foresee in the global/regional B2B e-commerce space? What is your outlook for B2B e-commerce segment?

In the near future, say five years from now, it is clear that manufacturers will open up to B2B eCommerce to be their main distribution channels. But 10 years from now, I believe, procurement jobs will be obsolete with entities directly integrating with platforms such as Lawazem and letting their business units place orders and monitor their spend in an automated AI-driven manner.

What are your future plans for this market? Other than Saudi Arabia, which other countries in the GCC are you planning to enter? How do you plan to capture a larger market share? Are you looking at raising more funds?

We believe we have introduced to the world the first operational procurement eCommerce platform. This has put us in an advantage given the vast experience the team has in this sector, and the technology that backs this experience. Thus, we are definitely going global in the near future, utilising our local and international partners with who already have strong bonds and this is planned to be the result of the coming funding rounds.