CASE STUDY-Daganghalal, the halal e-commerce pioneer helping create global Islamic Economy brands

OVERVIEW

1. Founded in 2007, DagangHalal is the first B2B online e-commerce platform focused on the Islamic Economy.
2. It helps suppliers of halal products connect and transact with manufacturers and distributors.  
3. The products and suppliers on DagangHalal include finished food products, ingredients, cosmetics, pharmaceutical products, and financial services providers.
4. The company provides integrated and end-to-end e-commerce services to suppliers and was listed on London’s ISDX Growth Market Exchange in April 2016.

ACCOMPLISHMENTS

1. DagangHalal has reached financial and organizational maturity, having listed on London’s ISDX Growth Market stock exchange in 2016, and achieving a valuation of 14.2 million pounds ($20.8 million)
2. Over 4,000 companies across 48 countries listed on its e-commerce platform
3. Several success stories on its platform, including Cosmoderm and Perfect Agro, both multimillion dollar revenue companies
4. Substantial revenue growth from 1.2 million ringgit ($0.3 million) in 2012 to 3.4 million ringgit ($0.9 million) in 2015, amounting to a 37 percent cumulative annual growth rate (ICAGR), according to company estimates

OPPORTUNITIES BEING ADDRESSED

What DagangHalal capitalized on much earlier than its competitors and other stakeholders of the Islamic Economy was the e-commerce and online marketplace potential for halal SMEs, which are the backbone of the Islamic Economy. Online e-commerce has been identified both by Dganghalal and the Malaysian trade authorities as a key driver for the halal and Islamic Economy and it has proven to be a key enabler for the growth and internationalization of halal SMEs.

Addressing the growing global halal and Islamic Economy, DagangHalal facilitates small manufacturers and suppliers to easily market themselves and access an international customer base, enabling international growth. It is the first successful player to address this opportunity.

Much of the halal food marketplace, estimated at over $800 billion in 2015, relies on offline transactions, which restricts the access of suppliers and manufacturers to local or nearby markets. DagangHalal is banking on a very positive outlook and growth projections for online marketplaces and e-commerce ; the online e-commerce spend on halal products was estimated at $123 billion in 2015 and the market is expected to exceed $230 billion by 2020, according to WTO data.

STRATEGY

Bringing halal SMEs to the global stage

DagangHalal helps small-to-medium sized enterprises access the broader market. In return for registering on the platform, small businesses have access to a broad online database of potential customers, and benefits from search optimization.

Khairil Ismahafiz commented, “Quite often SMEs have a limited budget for branding and marketing. With our platform, we really help SMEs build their brand on a global basis. We provide [a] halal trade manager which facilitates merchants in reaching markets through our platform. We also have a trade leads manager and provide marketing through social media, more recently online B2B2C, as well as search engine optimization support.”

DagangHalal offers free registration for sellers, which allows showcasing of a limited number of products.

For additional benefits, Premium packages include:

1.  Trade at $230 per year sign on
2.  Silver, at $500 per year, and
3. Gold, which is a full-feature package that allows up to 150 products to be listed and full access to social media marketing and trade management support.

There are notable success stories, including Cosmoderm and Perfect Agro which have achieved rapid growth in sales exceeding $1 million through DagangHalal’s platform.

Supporting the certification process and providing assurance on halal integrity

The Halal verify Engine (HVE) is DagangHalal’s unique feature for e-commerce providers. It enables companies to apply for certification online and helps to expedite the process. DangangHalal then keeps a repository of halal certificates and confirms the existence and halal certification of new suppliers through the HVE.

The company works closely with Malaysia’s certifier, JAKIM, and accepts halal certificates issued either by JAKIM or one of JAKIM’s 54 recognized certifier partners globally.

The assurance provides confidence and facilitates trade between suppliers on its platform.

“The Halal Verify Engine (HVE) makes us very unique and is not done by our competitors. That is how we differentiate ourselves from mainstream players like Alibaba that may have a halal marketplace, but do not have a robust process to check if those companies are really halal,” explained Ismahafiz.

Accessing global capital and consumer markets through a strong physical presence

To establish a global platform, DagangHalal has opened up three international offices to add to its home base in Malaysia -- in China, Hong Kong, and the UK.  and

Over the last five years the platform has actively travelled to attend food and beverage tradeshows globally, stopping in at Spain’s Alimentaria Food & Beverage Exhibition in 2016 and making a presentation to prospective European suppliers.

Its marketing efforts has enabled it to sign up suppliers from 48 countries, with increasing emphasis on Europe. “Right now 15 percent of our suppliers are from Europe but we see a huge opportunity and have established ourselves in key [European] markets,” said Ismahafiz.

The company also has a magazine, Halal Magazine (HMAG), which it produces on a quarterly basis and distributes to exhibitors and participants of international Halal Trade exhibitions.

To access international capital markets, DagangHalal established an investment office in London in 2014, to prepare for an IPO. Its IPO raise 4.2 million pounds ($6.1 million), of which 3.9 million pounds ($5.7 million) came from Malaysian investors and a further 0.3 million pounds ($0.4 million) from UK investors.

OPPORTUNITIES

DagangHalal is ideally positioned to continue rapid growth as it continues to sign up halal suppliers globally.

It is also targeting to expand the number of certifiers it works with to build a truly global halal e-commerce platform.

The IPO has helped in this end, with 3.6 million pounds ($5.3 million) of the total amount raised intended to accelerate its growth and international presence, and further expanding its sales and marketing department.

The company is also planning to expand into the online B2C market, a largely untapped opportunity in halal food.

CHALLENGES

There is an increasing competition in online B2B, with newcomers Zilzar and Aladdin Street competing with DagangHalal in the landscape . However, DagangHalal has differentiated itself through its market reach and its unique halal verification process. 

The company has emerged as a mature, publicly listed organization, and is bracing itself for increased scrutiny from investors. Discussing the experience, and the road ahead, Ismahafiz said, “We’ve had to do things in a very robust way, and modify our organizational approach from when we were a small company several years ago – this includes developing a separate investor relations department, and ensuring we’re prepared for scrutiny.”

© Salaamgateway.com 2016