The Egyptian toy e-commerce portal Tasala has halted operations. This e-commerce website was established in 2019 and pressed the pause button in April this year.
Speaking on why the startup decided to shut down, Ahmed Atif, co-founder of Tasala, said: “Egypt relies on imports for nearly 95% of its domestic consumption; locally produced toys make up only a small fraction of total sales. We face a triple challenge: the global shipping crisis, import restrictions, and currency The depreciation made it impossible for us to continue operating. Also, our business model was challenging.”
The Egyptian government imposed limits on “non-essential commodities,” including toys, after announcing new import restrictions. In the meantime, the protracted war and its economic repercussions have shook global financial markets as inflationary pressures rise.
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Egypt is experiencing one of the worst economic downturns in recorded history. Recently, the country has been plagued by a lack of foreign currency, which has slowed imports. Some small enterprises have already suspended operations, shifted their key business focus, or taken preventative measures such as wage cuts and layoffs to escape the economic hardship. The retail and e-commerce industries are the most impacted by economic challenges.
The COVID-19 pandemic increased Egyptians’ need for digital services, particularly the rapid development in demand for local e-commerce, with toys being the most popular item.
The $1 billion Egyptian market for children’s toys is anticipated to reach $1.5 billion by 2025. Due to shifting market conditions and a bleak economic outlook, market growth is anticipated to decelerate. In addition, the exchange rate of the U.S. dollar has increased at customs, and stores have limited stock, resulting in a 20–40 percent increase in the price of toys in Egypt.
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Larger merchants (those serving to higher income levels) have strong pricing power and can eventually weather the storm, but smaller competitors will struggle to locate adequate suppliers. To be vertical, but also to diversify products, the toy e-commerce platform sells additional children-related items, such as clothing and baby essentials.
Tasala toy Tasala toy
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh