A world to deliver
Technologically-savvy consumers; high internet penetration; a 360-degree product suite; and the Covid-19 pandemic. E-commerce arrived. The year 2020 was more than just the closing of a decade; it was an inflection point for individuals, businesses, and economies around the globe. The arrival and spread of the Covid-19 virus slowed several industries, upended the supply-demand balance, and caused many to rethink their strategies for survival and mitigation.
On the other hand, the pandemic also piloted innovation, rejuvenated several sectors, and marshalled the growth and adoption of digital solutions and channels that fell in step with virus containment measures across the globe, helping curate the ‘new’ ecosystem.
In the days and weeks following the outbreak of the pandemic, consumers and businesses pivoted towards technology, albeit for different reasons: The latter resorted to digitalisation to retain customers, capture market share, and emerge gainfully on the other side of the crisis. The former, meanwhile, ventured online to shop, learn and work.
E-commerce, having deep interests on both sides, rose as a natural winner.
“The Covid-19 was a good booster for e-commerce players because it taught them that in case of a huge surge in business, how were [areas such as] operations and customer service going to handle it. It’s almost like a steroid shot to the e-commerce industry because all of a sudden, everybody had to use it,” opines Rashid Mohamed Alabbar, board member at UAE-based Barakat.
“Anybody who was able to capitalise during Covid to give a good experience to customers in terms of delivery, in terms of the quality of the product, obviously will have an amazing advantage because you are going to be increasing your loyal customer base.”
Taarek Hinedi, vice president of FedEx Express Middle East and Africa operations, expands on it: “While e-commerce has long been a popular method of shopping across the Middle East, during the Covid-19 pandemic it has grown to become the retail option of choice. Both consumers and retailers have shifted their focus to safer and more effective ways to keep commerce moving in a challenging environment.
“Looking at recent consumer behaviour and spending habits, many companies are now strengthening their online presence and using e-commerce to make their products and services more accessible. In the first five months of 2020, the UAE saw a 300 per cent increase in demand for e-commerce services among consumers. In May 2020 alone, e-commerce represented the highest number of licences issued to any business sector.”
If history is a precedent, the sector’s growth trajectory is, in many ways, expected. From a mere $5.3bn in 2015, rising to $17.7bn in 2019, the GCC’s e-commerce market is expected to become an almost $50bn market by 2025, a report by Kearney Middle East notes.
Two salient factors will drive this growth: more, newer and digital-savvy shoppers – millennials account for more than 45 per cent of the user base, which is growing at 6 per cent CAGR; and more growth in key segments – online food delivery and grocery are expected to grow by 30 per cent each year until 2025, while fashion and beauty is forecast to experience annual growth of 18 per cent over the same period, the report suggests.
Test of resilience
E-commerce, similar to the technology underpinning it, has gone through several layers of disruption. But the pandemic arguably made the most compelling case for its evolution and usage, promising convenience, safety and efficiency all bundled in one offering.