Zood: reviving the Silk Road

Biography

Laurent Sciboz is the chief investment officer and a board member at ZOOD’s parent company OrientSwiss SA. He previously held roles at UBS, Rothschild, ING Bank and PARfinance.

ZOOD is a digital lending platform driving financial inclusion by providing flexible payment methods to individuals/SMEs in Uzbekistan, Pakistan and Lebanon. Headquartered in Switzerland, ZOOD has over 10 million users (6 million in Uzbekistan).

The company’s services make up an ecosystem engulfing fintech (ZOOD Pay), e-commerce (ZOOD Mall) and e-logistics services (ZOOD Ship operated by Fargo).

Since inception, ZOOD has raised over $80m.

This interview was conducted and transcribed by Timothy Motte.

In Uzbekistan, you launched the marketplace before any fintech products. Why?

Our goal is to provide credit for the masses. In countries like Uzbekistan, the lack of credit histories, coupled with inefficient capital distribution by local banks, foster low credit penetration. Before offering local credit, we had to build up local credit histories.

A good way to do so was to build an e-commerce marketplace, which, opportunistically, Uzbekistan lacked when we launched.

The marketplace allows us to aggregate consumers and merchants while gathering valuable data on both. Marketplace consumers can purchase items using interest-free Buy-Now-Pay-Later (BNPL), akin to a product-based loan. Their repayment patterns enable us to credit score them and usher them into interest-bearing, longer-term loans. Today, interest-bearing loans constitute the vast majority of our loan portfolio.

We aren’t an e-commerce platform. We’re building an ecosystem geared towards lending products for the vast majority of consumers traditional banks don’t want to serve. Adjacent ventures, such as the marketplace, fuel our consumer acquisition and refine our credit scoring processes.

What existing companies are you modeled after?

We are closest to Kaspi, a publicly-listed Kazakh super app. Like Kaspi, we view ourselves as a holistic ecosystem rather than a bunch of disparate products.

The main difference is that Kaspi became a regulated bank first, which they leveraged to collect consumer data and develop financial products. We’ve taken it the other way around, starting with a marketplace and increasingly complex (BNPL, then interest-bearing) lending products, while tending towards becoming a bank.

While Uzbekistan was a virgin e-commerce market when you launched in 2018, new competition has arrived (Uzum, Wildberries)... How do you view these new contenders?

Uzbek e-commerce is so under-penetrated that more competition isn’t problematic. In fact, the arrival of new marketplaces educates new users, a task we used to handle ourselves. Anything that foments a more mature, professional e-commerce market helps us. It reduces consumer acquisition costs (CAC) while increasing total addressable market (TAM).

Competition becomes a burden when the market is saturated, which isn’t the case. There’s no exclusivity between these new platforms. Price-sensitive consumers and merchants use multiple ones simultaneously. The real beneficiaries are the consumers, who get better deals and improved user experiences, as each platform competes for their business.

Each player has their own positioning as well; we are geared towards lending products while Uzum is structured as a “classic” superapp play, for example.

One of our advantages is our range of goods: we host around 6 million SKUs (unique products) from around the world, including items from Turkey, China and even a French retailer. Another edge is our advanced credit scoring capabilities, which remains our ecosystem’s primary purposes. This revenue stream diversity is essential to maintaining financial sustainability.

How do you transition users from cash to digital payments?