The Series B funding would support the startup to expand into new markets and introduce new services and products. It did not specify which markets.
Other investors that participated in its latest round included global investment manager Coatue, Gulf technology investor Shurooq Partners, co-investment vehicle Endeavor Catalyst, and existing investor Checkout.com, a global payment solutions firm.
As mentioned by Reuters, Tamara is also in negotiations with local, regional, and international lenders for debt financing, a new foray for banks in the region that are still learning about the nascent sector.
Tamara has so far raised USD 215 million in capital and has partnered with firms including IKEA and Saudi retailer Jarir, in addition to ecommerce platforms SHEIN and NAMSHI.
It expects to reach profitability in 2023, with plans for a listing in Saudi Arabia in the future, which may include a second listing in other markets such as the UK.
Tamara, which has over 3 million active shoppers, is one of the Gulf Arab region's largest BNPL providers and competes with companies including Dubai-based Tabby.
The app’s early in-market success spurred a USD 110 million investment in a Series A round led by digital payments giant Checkout.com. This followed USD 6 million of funding in a seed round.
According to research by Checkout.com, more than 50% of customers across the region will use BNPL in 2022 – putting the Middle East ‘out ahead’ as a leader in adoption. The survey concluded that – in addition to those already using BNPL – 31% of UAE residents plan to use the technology in the coming 12 months followed by Saudi Arabia at 27%, Kuwait at 26%, and Bahrain at 18%.
Tamara acts as a marketing and discovery channel for its partner merchants to drive new customers and sales online and in-store. After working with Tamara, their partners have seen on average 40% higher average order value, 20% lower cash on delivery, 15% higher conversion and significantly lower order return rates.
Demand for BNPL, which allow consumers to order and take a product without immediately paying, has risen in recent years, driven by an increase in online shopping.
The provider pays the merchant immediately and is paid back by the consumer in installments, typically only earning revenue from transaction fees charged to the merchant.
The BNPL business model emerged in times of very low interest rates, but the prospect of sustained increases to interest rates could spell trouble for the sector.
A recent study by SkyQuest and data obtained from World Bank found that BNPL market grew from 0.2% of total ecommerce sales in 2014 to 3.1% of total ecommerce sales in 2021. This suggests that there is a growing trend of consumers wanting to take advantage of deferred payments. This could be due to several reasons, including changes in consumer behaviour and the growth of ecommerce platforms.
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