Noon is an eCommerce platform that was founded by Mohamed Alabbar in 2016 and is headquartered in Riyadh, Saudi Arabia. The company was founded to create a dynamic digital economy for consumers and businesses in the Middle Eastern market.
As an eCommerce retailer, Noon utilizes the marketplace business model like competitors such as Amazon. The company sells various private label brands for a profit and offers a full suite of tools to third-party sellers. Fees are charged for cancellation, storage, and fulfillment, among other scenarios.
Noon also charges money for its next-day and same-day delivery services. These services allow customers to have a range of fresh food items and other home essentials delivered straight to their door.
Noon is an eCommerce platform that was founded by Mohamed Alabbar in 2016 and is headquartered in Riyadh, Saudi Arabia.
Noon was started with a vision to create a dynamic digital economy for consumers and businesses in the Middle Eastern eCommerce market.
The market, which encompasses the United Arab Emirates, Saudi Arabia, and Egypt, is home to around 440 million wealthy consumers with a high internet and smartphone penetration rate.
Despite the impressive size of the market, Middle Eastern consumers have been much slower to warm to eCommerce as a way to purchase goods and services.
When Noon was launched in 2017, it encountered several unique obstacles. For one, Alabbar needed to build trust with consumers by creating a reliable, predictable, efficient online ordering experience.
Noon also had to make allowances for Saudi Arabia’s unreliable postal system, with many consumers not having a home address and instead collecting their mail from the post office.
Because of the unreliable postal system and future aspirations to scale more rapidly, Noon decided to keep its logistics and fulfillment services in-house.
Delivery vans and drivers are all Noon employees and each fulfillment center has a “sortation” area where orders are grouped by customer location before they are distributed.
As an eCommerce retailer, Noon utilizes the marketplace business model like competitors such as Amazon.
In addition to selling private label products for a profit, the company also makes money from numerous merchant fees and delivery fees.
Merchant fees
Merchant are charged a sales commission whenever they sell a product on the Noon platform.
The exact commission depends on the product category, with home appliances attracting a fee of 4.5% and footwear at 27%.
To increase revenue, merchants can utilize the company’s custom-built seller tools, support team, and end-to-end delivery system.
For those who desired more visibility, there are also various marketing and advertising tools.
Merchants can advertise on Noon using various banners and so-called “mega modules”, while there is also an opportunity to advertise via Noon’s Instagram stories. Prices for advertising services are available on request.
Shipping and handling fees are typically charged at 9% of the total order amount. There is also a storage fee which can be as much as around USD 1.40.
For items that sit in storage for more than 180 days, a long-term storage fee also applies. Larger items such as furniture that take up the most space attract the highest fees.
Lastly, a fee is charged for seller-initiated cancellations or those that arise because the product is faulty.
Like sales commission, footwear and apparel (27%) attract the highest fees, whilst audio and video (4%), video game consoles (5%), and car accessories (5%) attract the lowest.
Noon Daily
Noon Daily is a next-day grocery delivery service ideal for fresh foods, bread, dairy, meat, household essentials, and baby food.
Noon Daily delivery fees depend on the city, the total order amount, and whether or not the customer is a VIP member.
Now Now
Now Now is a similar delivery service to Noon Daily except the items are delivered in a matter of minutes.
The company partners with exclusive stores in a customer’s local neighborhood to ensure delivery occurs on time.
Delivery fees for this service are 6 Emirati Dirhams, equivalent to approximately $1.60.
Key Highlights
Noon Overview:
Noon is an eCommerce platform founded in 2016 by Mohamed Alabbar and headquartered in Riyadh, Saudi Arabia.
It aims to create a dynamic digital economy for consumers and businesses in the Middle Eastern market.
Business Model and Revenue Generation:
Similar to Amazon, Noon operates as an eCommerce retailer using the marketplace businessmodel.
The company sells private label brands, offers tools to third-party sellers, and charges various fees.
Merchant fees include sales commissions based on the product category, with rates varying from 4.5% to 27%.
Merchants can use seller tools, support, and delivery systems for increased visibility.
Additional revenue comes from shipping and handling fees (9% of order amount), storage fees, and cancellation fees.
Noon offers advertising services with banners, “mega modules,” and Instagram story ads.
Noon aims to secure 15% of the Middle East eCommerce market by 2026.
Origin Story:
Noon was founded by Mohamed Alabbar in 2016 with the goal of tapping into the Middle Eastern eCommerce market.
The Middle East has high potential with wealthy consumers but relatively low eCommerce adoption.
Trust and efficient ordering were challenges, and Noon built its own logistics and fulfillment services to ensure reliable delivery.
Noon secured $2 billion in financing in 2021 to expand its market share and improve infrastructure.
Noon Daily and Now Now:
Noon Daily offers next-day grocery delivery for fresh foods, essentials, and baby food.
Delivery fees for Noon Daily vary based on the city, order amount, and VIP membership status.
Now Now is a rapid delivery service partnering with local stores for quick deliveries.
Delivery fees for Now Now are 6 Emirati Dirhams (about $1.60).
Business Model Element
Analysis
Implications
Examples
Value Proposition
Noon’s value proposition includes: – Wide Product Range: Offering a diverse selection of products across various categories. – Convenience: Providing a one-stop-shop for customers’ needs. – Competitive Pricing: Offering competitive prices and discounts. – Express Delivery: Ensuring fast and reliable delivery services. – Exclusive Deals: Featuring exclusive product launches and deals. Noon appeals to customers seeking convenience, a broad product range, competitive pricing, and fast delivery options.
Attracts customers looking for a variety of products in one place. Offers competitive pricing and discounts, enhancing affordability. Ensures customer satisfaction through fast and reliable delivery. Drives engagement with exclusive product launches and deals. Addresses diverse customer needs with a comprehensive value proposition.
– A diverse selection of products across categories. – A one-stop-shop for customers’ convenience. – Competitive pricing and discounts. – Fast and reliable delivery services. – Exclusive product launches and deals.
Customer Segments
Noon serves the following customer segments: 1. Shoppers: Individuals and families looking for a wide range of products. 2. Tech Enthusiasts: Consumers interested in electronics and gadgets. 3. Fashionistas: Those interested in fashion and beauty products. 4. Homeowners: Customers seeking home goods and appliances. 5. Grocery Shoppers: Individuals looking for grocery items. Noon caters to a broad customer base with diverse needs.
Attracts a wide range of customers with different interests. Engages tech enthusiasts, fashion lovers, homeowners, and grocery shoppers. Targets diverse customer segments for increased market share. Offers a variety of products to meet the needs of different audiences. Sustains growth by addressing various customer segments.
– Individuals and families seeking a wide range of products. – Consumers interested in electronics and gadgets. – Fashion and beauty product enthusiasts. – Homeowners looking for home goods and appliances. – Shoppers seeking grocery items.
Distribution Strategy
Noon’s distribution strategy includes: – E-commerce Platform: Operating a user-friendly website and mobile app for online shopping. – Warehousing: Utilizing warehouses and logistics for inventory management. – Delivery Fleet: Managing a dedicated delivery fleet for order fulfillment. – Marketplace Model: Partnering with third-party sellers to expand product offerings. Noon ensures a seamless online shopping experience through its platform, efficient warehousing, a reliable delivery fleet, and a marketplace model for product variety.
Provides customers with a user-friendly online shopping platform. Ensures timely order fulfillment through efficient warehousing and delivery services. Expands product offerings by partnering with third-party sellers. Implements a multi-faceted distribution approach for growth and convenience.
– Operating a user-friendly e-commerce platform. – Utilizing warehouses and logistics for inventory management. – Managing a dedicated delivery fleet for order fulfillment. – Partnering with third-party sellers to offer a wide range of products.
Revenue Streams
Noon generates revenue through various streams: 1. Product Sales: Earnings from the sale of products on its platform. 2. Marketplace Fees: Charging fees to third-party sellers for using the marketplace. 3. Advertising: Offering advertising and promotional opportunities to brands and sellers. 4. Subscription Services: Providing subscription-based services for additional benefits. Noon diversifies its income sources through product sales, marketplace fees, advertising, and subscription services.
Earns revenue from product sales on its platform. Charges fees to third-party sellers for using the marketplace. Generates income from advertising and promotional opportunities. Offers subscription services for recurring revenue. Diversifies revenue streams for financial stability and growth.
– Earnings from the sale of products on its platform. – Charging fees to third-party sellers for using the marketplace. – Income from advertising and promotional opportunities. – Providing subscription-based services for additional benefits.
Marketing Strategy
Noon’s marketing strategy involves: – Marketing Campaigns: Running advertising campaigns and promotions. – Exclusive Deals: Featuring exclusive product launches and deals. – Customer Engagement: Fostering customer engagement through social media and email marketing. – Partnerships: Collaborating with influencers and brands for endorsements. Noon focuses on creating brand awareness, engaging customers, and attracting them through exclusive deals and promotions.
Drives brand awareness through marketing campaigns and promotions. Engages customers through exclusive deals and product launches. Utilizes social media and email marketing for customer engagement. Leverages partnerships with influencers and brands for endorsements. Implements a multi-faceted marketing strategy for growth.
– Running advertising campaigns and promotions. – Featuring exclusive product launches and deals. – Fostering customer engagement through social media and email marketing. – Collaborating with influencers and brands for endorsements.
Organization Structure
Noon’s organizational structure includes: – Executive Leadership: Led by the CEO, responsible for strategic direction. – Product and Technology Teams: Focused on platform development and user experience. – Operations and Logistics: Managing warehousing and delivery operations. – Marketplace Team: Overseeing the third-party seller ecosystem. – Marketing and Growth: Engaging in user acquisition and marketing efforts. – Customer Support: Providing assistance and support to customers. Noon maintains a structure aligned with core functions, ensuring seamless operations and growth.
Led by an executive team responsible for strategic direction. Focuses on platform development and user experience. Manages warehousing and delivery operations efficiently. Oversees the third-party seller ecosystem for product variety. Engages in user acquisition and marketing efforts for growth. Provides dedicated customer support for user satisfaction. Maintains a well-structured organization.
– Led by an executive team responsible for strategic direction. – Focused on platform development and user experience. – Managing warehousing and delivery operations efficiently. – Overseeing the third-party seller ecosystem for product variety. – Engaging in user acquisition and marketing efforts for growth. – Providing dedicated customer support for user satisfaction. – Maintaining a well-structured organization.
Competitive Advantage
Noon’s competitive advantage is derived from: – Diverse Product Range: Offering a vast selection of products across categories. – Convenient Shopping Experience: Providing a user-friendly platform for easy shopping. – Competitive Pricing: Offering competitive prices and promotions. – Strong Local Presence: Focusing on the Middle Eastern market’s unique needs. – Marketplace Model: Collaborating with third-party sellers for product variety. Noon’s strengths in product range, convenience, pricing, local presence, and marketplace model position it as a leading e-commerce platform in the Middle East.
Distinguishes itself with a vast product selection across categories. Provides a user-friendly platform for hassle-free shopping. Attracts customers with competitive pricing and promotions. Understands and caters to the specific needs of the Middle Eastern market. Expands product offerings through the marketplace model. Enjoys a competitive edge in the regional e-commerce landscape.
– Offering a vast selection of products across categories. – Providing a user-friendly platform for easy shopping. – Offering competitive prices and promotions. – Focusing on the unique needs of the Middle Eastern market. – Collaborating with third-party sellers for product variety. – Maintaining a competitive edge in the regional e-commerce landscape.
Connected Business Frameworks, Concepts, And Tools
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A north star metric (NSM) is any metric a company focuses on to achieve growth. A north star metric is usually a key component of an effective growth hackingstrategy, as it simplifies the whole strategy, making it simpler to execute at high speed. Usually, when picking up a North Start Metric, it’s critical to avoid vanity metrics (those who do not really impact the business) and instead find a metric that really matters for the businessgrowth.
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The freemium – unless the whole organization is aligned around it – is a growthstrategy rather than a businessmodel. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
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In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
In a franchained businessmodel (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
