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We often overlook the startup ecosystems of countries that have just started to thrive, and Uzbekistan is one of them. Although not widely known, the Central Asian nation is growing at a noteworthy velocity. Several startups, including university search platforms and agri-tech productivity services, are innovating the country's society. Among them, Uzum is particularly worth remembering.
Uzum is an e-commerce startup that started as an online marketplace. The nation's first unicorn plans to expand its service to deliveries, finance, and business development. Uzum currently records over 8 million monthly active users (MAUs) and 9,000 merchants in its ecosystem.
How did Uzum become Uzbekistan's first unicorn and the nation's representative startup in just a year?
Djasur Djumaev, CEO and Co-Founder of Uzum unearthed the possibility of online commerce from his personal experience.
When he tried to buy new mobile phones for his family as a holiday gift, Djasur got three calls that the product was unavailable or delayed on the delivery date. He discovered that online stores at the time needed to include even the most basic user convenience and logistics infrastructure. To Djasur, this was an opportunity in plain sight.
“It wasn't difficult to realize that these online stores were missing the basics. More so, all the shopping websites and apps were merely a shopping window. This was a huge market I just couldn’t let go.” _Djasur Djumaev in Entrepreneur Interview, 2023.6
Djasur used his experience building tech businesses in developing countries and launched the marketplace app in October 2022. He gathered several local businesses and entrepreneurs who shared the same vision and formed a team. After the initiation, Djasur and his team solely focused on gaining customers' trust. Because bazaars, or outdoor markets, have played a vital role in Uzbekistanians' daily lives, e-commerce was an unfamiliar concept.
Uzum established an infrastructure for delivery that provides nationwide delivery within 24 hours, including a fulfillment center with its transportation fleet. The startup established a logistics network by setting up pickup points for nationwide next-day deliveries. Later, these points also introduced digital services to users' neighbors. People could access various Uzum services as they collected the items they ordered, which led to a natural network effect.
At the time, Uzbekistan was one of the markets where consumers moved directly to mobile commerce environment from offline. Uzum’s order collection points also played a role in the brand advertisement, making people wonder what the new mobile app will offer. More people realized they could rely on Uzum’s online shopping experience and recommend it to others.
After positioning itself as a trustworthy service to the people of Uzbek, Uzum expanded into the financial sector, as the founder had challenged the online shopping market.
As Uzum tried to grow with local businesses, the team discovered that most were unbanked and had to use mobile banking services. This is why Uzum also launched Uzum Bank, a fully digital financial service, and Uzum Nasiya, a Shari'ah-compliant BNPL(Buy Now Pay Later). All these services were locked on to a single goal: revitalizing the Uzbek e-commerce ecosystem.
Uzum concentrated on building a factor that every startup wants to create today: the community. The unicorn tried to provide support and information to local stores and small businesses within the Uzum ecosystem. Based on this partner-centered approach, Uzum could identify the needs for business financial services and payment systems, leading to mergers.
For example, Uzum's payment system was possible thanks to cooperation with Click, the country's largest national payment company. The Merger of Paymart, formerly known for its BNPL service, became Uzum Nasiya with its technology stack and abundant user base. Uzum did not simply try to expand its size. The synergy between ecosystem members was the company's backbone of mergers, cooperation, and enlargement.
“Synergy of services within the ecosystem creates unique opportunities that drive the process of businesses and customers transitioning from offline to online.” _Roman Lavrentiev, COO of Uzum Group
This exceptional approach to growth is paying off. According to a 2023 Research Group Central Asia(RGCA) survey, Uzum ranked first over Instagram and Telegram as the most preferable e-commerce destination. The startup also ranked 3rd in Uzbek payment services. Since Click is now a part of Uzum, Uzum also plays a significant role in the Middle Asia nation's financial sector.
(Refer to : Meet Uzbekistan’s first unicorn: e-commerce startup Uzum)
In March 2024, Uzum secured 114 million USD in funding and became Uzbekistan's first unicorn startup. The post-money valuation is over one billion USD. The bold startup plans to use the funds to develop its digital and logistics infrastructure even further. Uzum is also looking forward to raising additional funding of about 200 million USD in a Series B round from the US and the United Kingdom.
Uzbekistan is starting to show high potential for growth thanks to increasing internet penetration, young generations' need for better mobile services, and relatively low usage of digital banking and financing. How will Uzum differentiate itself from emerging competitors and international players? The unicorn's synergy-focused perspective will play a vital role in the future.
Written by Jinsoo Choi
*Read the case studies of Asian startup founders' starting point and business/growth strategy in detail.
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