How does Noon make money?

  • 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.

Origin story

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. Even with the pandemic moving more of them online, eCommerce only accounts for around 2.5% of all sales in the Middle East compared to around 22% in the USA, for example.

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.

In October 2021, Noon secured as much as $2 billion in financing from investors that included Saudi Arabia’s sovereign wealth fund. The capital would be used to secure more of the Middle East eCommerce market and upgrade infrastructure to improve delivery times. The company hopes to own 15% of the eCommerce market by 2026, or approximately $70 billion worth.

Noon revenue generation

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.

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