Complex Made Simple

Creating the Idealz business: An exclusive look at how one company makes money by gifting it away

Who doesn’t like a chance at a free gift when buying a product, especially when the product is as cheap as a T-shirt and the gift is as pricy as a Mercedes Benz?

Idealz has product price ranges that start from as low as 10 Dirhams and reach up to 825 Dirhams Idealz closed over 1500 campaigns and given away over 45 million Dirhams worth of prizes "We are launching our next platform, Idealz One, which shares about 80% DNA with Idealz but with a new twist"

Who doesn’t like a chance at a free gift when buying a product, especially when the product is as cheap as a T-shirt and the gift is as pricy as a Mercedes Benz?

We’ve all seen campaigns like ‘Buy 1 get 1 Free’, or even ‘Get a free gift with every purchase’ type giveaways, but Idealz, a home-grown UAE company, has taken incentive buying to levels unseen before in the history of retail.

They are not satisfied with earning buyers a free T-shirt or trinkets to hang on a wall or dresser.

No, they want you to have a chance at up to 1.5- 2 million dirhams ($400,000-$545,000) in free gifts just as a way to say, ‘Thank you for buying from our store’.

Oh, and they managed to build 3 schools for the needy, doing just that. We’ll get to that, but first who is Idealz?

Online store with a snazzy value add

Jad Toubayly, Founder and CEO of IdealzLaunched 3 years ago, Idealz is an online store that only sells its own brands and in only two product lines: clothing and stationery.

“These products are made and designed by us and sold exclusively through us via our online shop. You cannot buy them in any other store, be it brick and mortar or online,” Jad Toubayly, Founder and CEO of Idealz, told AMEinfo.

“We don’t call ourselves low cost or high cost, we price it according to where the brand should be at. We’re not Gucci or Fendi and we’re not GAP. We’re settled nicely in between. The value-add prize is the unique marketing strategy to push the brand and incentivize sales.”

Idealz has product price ranges that start from as low as 10 Dirhams and reach up to 825 Dirhams.

Depending on the item purchased, be it a cap, hoodie, or T-shirt, the chance at a prize also varies from lifestyle products to watches, cash, jewelry, gold, cars, real estate, and more.    

“When we first launched, I wouldn’t dare go above 250,000 Dirhams in prize values, but today we can do 1.5 to 2 million Dirhams with ease,” Jad revealed.

“We’ve had impeccable growth. We’ve closed over 1500 campaigns and given away over 45 million Dirhams worth of prizes.”

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Okay. So how does the math work?

Jad explained that premium brands are pricy due to the quality of the material they use and the brand name they carry.

“The cost of production is pretty much the same across the board, for low- or high-cost brands. The Guccies, Dolce & Gabbanas, and others use the high margins they make to place the brand in top tier locations, for décor, and for marketing by having top models wear it,” Jad began.

“Instead of this, our strategy is to spend our revenue margins on offering added value via prizes.”

At first, yours truly thought that the brands behind the prizes are in on this, perhaps offering discounts or even providing them for free in return for the massive marketing promotion they are able to garner from Idealz’s reach, now 1 million users and climbing.

“From a ‘prize vendor’ perspective, if you’re a watch supplier, car dealer, or real estate developer, we are a typical walk-in customer. We don’t ask for discounts in return for marketing. If I put a Mercedes G-wagon as a prize or a high-priced watch, I buy it as anyone person would in the market. There is no sponsorship or behind the scenes marketing or anything,” Jad stressed.

But we are talking about an 850,000 Dirhams car here, in return for selling T-shirts or caps?

Jad offered: “The way we sell our products, be it a T-shirt, hoodie, or cap, is that we sell them in limited quantity campaigns. For a car prize, we might say we have 2000 units of this product, sold at that price. For every product sold, the customer gets a complimentary coupon that can win him/her that prize. And yes the math works, we cover our cost and make a profit when we sell out.”

There is a risk though.

“We do run the risk of not selling the entire campaign. We are regulated by the Dubai authorities, and any campaign we do has a timeline of 2-6 months depending on the permit, during which time we either sell out or run a loss,” Jad said.

And it’s for this very reason that Idealz will not at this point go above a certain Dirham amount unless the digital footfall is there to justify it, not to mention the time restrictions to complete the sale.

Idealz’s unique prize strategy

Idealz could easily secure exclusivity deals to get the best prices possible for the prizes the company is gifting.

“The reason why I don’t do exclusivities is because I curate what’s hot and what’s highly sought after in the market, and that changes from season to season, from brand to brand,” Jad explained.

He continued: “This is specifically relevant in electronics. Say I do a tie-up with Sony and restrict myself to PlayStations, but a couple of months later, Xbox comes out with the latest craze everyone wants. That’s why I stay completely agnostic to price and brand.”

This is not to say that this option doesn’t keep knocking at the online store’s door.   

According to Jad, Idealz has been increasingly approached by several brands from all sectors of the economy to move their products through their platform, using the company’s unique selling strategy.

“We have been approached by car dealerships, yacht companies, diamond traders, watch retailers, and real estate developers who have come to appreciate the high level of turnover we achieve by giving out those prizes and the model’s uniqueness,” Jad said.

“But I have not been approached by anyone who would want to give us their products for free. Maybe with big discounts but not for free.”

But here’s the thing.

“Even if they are at $0 cost to me, there is still the cost of running the campaign, including permit costs, cost of product manufacturing, marketing, and so on. The risk of losing is still high when using prizes that are lesser-known brand or ones not in high demand.”

Sharia-compliance

Jad explained that from a Sharia perspective, Idealz is fully compliant.

“You are not buying the ticket. You are buying an item of value and we are providing an incentive. My strategy allows me to sell at high volumes and at the prices that can achieve my sales goals,” Jad said.

“As a pre-requisite to be commercially licensed in the UAE, we have two sets of approved fatwas, one by Dar Al Sharia and another issued by Awqaf, and both signed by scholars on their boards.”

A new Idealz with a twist  

In the near future, Idealz is enhancing its loyalty program, “at the level of when you buy, what you get, and the benefits you receive in every tier you are at.”

“We will do border-to-border delivery across the UAE in partnership with Aramex, engage in a number of collaborations with top tier brands in the UAE across a wide variety of sectors like travel, tourism, real estate, lifestyle, and so on,” Jad revealed.

“And we are launching our next platform, Idealz One, which shares about 80% DNA with Idealz but with a new twist to it.”

Ideals and good deeds

Idealz gives buyers the option to donate products to charity at the checkout.

“We are in partnership with Dubai Cares and at the end of every month, we make sure they receive all the items donated by customers. For items they don’t need, we do a buy-back arrangement at products’ cost to our business and they get money in return,” Jad indicated.

He ended: “We have the authority to direct that money into any initiative we want. We have since built 3 schools for the under-privileged using that same money we had to repurchase. The first school is in Nepal, the second is in Cambodia, and the third is now being completed in Malawi.”