Veli: the Georgian e-commerce startup delivering a better online shopping experience
Launched in early 2022 with Adjara Group among its primary backers, Veli is the latest e-commerce startup to vie for a chunk of Georgia’s expanding e-commerce market. Investor.ge recently sat down with CEO Archil Piriashvili to hear how Veli’s customer-centric approach and Amazon-esque fulfillment model aim to transform online shopping in the country.
The prospect of inadvertent run-ins with moped-riding delivery drivers repping the likes of Wolt, Glovo, or Bolt Food has become a daily reality for drivers in Georgia’s capital, offering a visual reminder of Tbilisi residents’ growing obsession with online delivery services – a trend that jumped three-fold in value to 167 million GEL in the first year of the pandemic alone.
Despite this visual indication that the online shopping revolution has made its way to Georgia’s front door, other figures paint the country’s e-commerce adoption as still in its nascent stages. A report published by Galt & Taggart in 2021 put Georgia’s e-commerce penetration rate at a measly 1.1% of retail sales. This, compared to an average penetration rate of 12% in Europe and 18% worldwide, the publication argued, is largely due to the lack of user-friendly, efficient online shopping experiences currently available on the local market.
Enter Veli, the latest e-commerce startup in Georgia that has been steadily gaining market share with its offer of “free delivery in as little as three hours” since its inception in February 2022. Coming in as the current #1 e-commerce site in Georgia according to web analytic company Similarweb’s traffic ranking system, the platform is backed by Adjara Group and has already delivered more than 50,000 orders.
CEO Archil Piriashvili says the company’s success and average 20% MoM growth in sales over the last year is predominantly due to its customer-centric approach. “We all have our own horror stories from the pandemic,” says Piriashvili on why he founded the startup. “We were stuck at home needing to buy something, so we ordered it online. And it was a disaster – delivery was unreliable and disorganized, sometimes we didn’t even get the product we had ordered.”
“So Veli,” he continues, “was created out of a need we identified ourselves as customers. We felt like one of the main barriers to e-commerce growth in Georgia was poor customer experiences, so we set out to offer our own solution.”
To address issues around reliability, the e-commerce platform adopted a model akin to that of Amazon and a first on the Georgian market – constructing their own fulfillment and distribution center on the outskirts of Tbilisi.
“Having our own warehouse has allowed us to centralize the fulfillment process and eliminated issues that many third-party delivery companies in Georgia experience,” says Piriashvili. “We can see in real-time what products are available and update the site accordingly,” he explains, noting that semi-automated processes track inventory and keep customers from making an online purchase only to receive the dreaded call that “the item you ordered is out of stock.”
On the delivery end, Veli employs their own fleet of drivers for delivery throughout the capital, which is how Piriashvili says they are able to offer such timely delivery services. “We offer free delivery for all our customers, with same-day delivery in as little as three hours within Tbilisi, as well as the ability to schedule delivery times. Our customer base is predominantly young and busy – so we wanted to take the guesswork out of trying to plan your day around when a delivery may or may not come.”
Capping off its approach, he says, is the company’s liberal return policy. “One of the major complaints we had during our market research was how difficult it was to return products bought online.” To ease this often opaque and convoluted process, the site offers a 14-day, no-questions-asked return policy, sending couriers to pick up the returns and guaranteeing money back within five working days.
This policy, quite generous in a country that is still in early days of implementing consumer protections laws akin to that of the U.S. or EU, is part of the reason Piriashivili says customers keep coming back. “We weren’t sure at first if this return policy would be costly for us as a business. But we’re happy to say that so far, we’ve got a low return rate. More importantly,” he adds, “is our customer retention rate, which is above 40%. These repeat customers help lower our customer acquisition cost and tell us that we’re doing something right.”
What’s on offer
Much like Amazon, the site operates under a B2C model, offering both self-operated and third-party products to its customers.
This means that it sells directly to customers but also works with local retailers to sell their products in a similar way to other local e-commerce platforms like Vendoo.ge and Extra.ge. Unlike those competitors, however, Veli requires third-party sellers to house their inventory in its warehouse, which “keeps fulfillment and delivery in-house, allowing us to ensure the best customer user experience from start to finish,” explains Piriashvili.
Also unique to the platform is what’s on offer, with the platform’s 15 categories and 40,000-plus products ranging from everyday household consumer goods to niche brands and exclusive products. “A large part of our sales is in fast-moving consumer goods – household products that you could pick up at the local store,” he says.
The rest of their sales comes from brands and products, predominantly imported from abroad, that “can’t be found anywhere else in Georgia.” In a move that is set on taking a portion of the estimated 459 million GEL market for cross-border e-commerce in Georgia, Veli hopes to become the go-to for consumers who typically order products abroad and use freight forwarders like USA2Georgia or KiwiPost to ship them into the country.
“A lot of our market research has gone into understanding what these consumers are ordering abroad. Based on this, we are constantly expanding our product offerings to try and meet that demand with the idea that if we can provide these goods at competitive prices, Veli will become the obvious choice for consumers instead of waiting weeks for something to arrive from the U.S. or Europe.”
Tech-driven solutions
As with any start-up in its early stages, Veli has encountered its fair share of bumps in the road during its first year of business. In addition to the challenge of customer acquisition, Piriashvili says creating a great online user experience requires constant attention and technical adaptation.
“One of the struggles in trying to create a unique platform that works with the particularities of the Georgian market is that there is no standard third party solution that we can just copy and paste. We’ve had to invest a lot in the tech side to make sure we’re constantly improving the user experience.”
And with its growing in-house team of web developers, Veli has been able to roll out several new features already in 2023. “We launched a B2B service in February, which allows businesses to register on the site and order products through a business account. We also launched an English language version of our website in early March, and in April, we’ll be hard launching our mobile app,” says Piriashvili.
Looking ahead, Veli’s CEO says the company plans to keep expanding as the market does. With Galt & Taggart predicting the e-commerce market in Georgia to reach a value of 2.2 billion GEL by 2025 and local e-commerce expected to grab more than half of total online retail spending, he says he looks forward to new actors entering the market.
“More competitors entering the market indicates that the market is growing, which is what we want to see,” he says. “On our side, we plan to keep expanding our product categories on an ongoing basis. We also foresee opening a second distribution center in Western Georgia by the end of the summer, which will allow us to start offering same-day delivery in other Georgian cities.”
“Our investor, Adjara Group, is always looking for business ideas that are scalable, and we are certainly looking to expand regionally – probably sometime in 2024,” he continues. “We understand that with scale comes increasingly complicated logistical and technological challenges, but we have a great team and are working to build out the Veli platform in a way that will allow us to scale to a regional presence soon.”