UAE’s logistics does the heavy lifting
FAST GROWTH OF ECOMMERCE IS RECREATING THE DYNAMICS OF HOW BUSINESSES HANDLE STOCKING
The sheer scale of growth in UAE ecommerce is carrying everything in its wake ... including the logistics and warehousing sectors. Businesses are either putting up new investments to expand their in-house storage and handling capacities or subcontracting to third-parties who can do the needful. The need of the moment — and of the future — is to have the stock in hand for speedy delivery to the consumer.
“Ecommerce is catching up with where it should be based on the key metrics that are driving it worldwide — broadband penetration and smartphone penetration,” said Idriss Al Rifai, founder and CEO and of Fetchr, which has introduced an app that will use a smartphone’s GPS coordinates to facilitate the pickup and delivery of goods. “This growth strides across multiple verticals, so much so it places demands on logistics companies to comply with new standards for the delivery of packages.
Under-catered to
“Delivery companies are aware this segment was under-catered and are now trying to find solutions to the specific concerns of ecommerce: lead time, the cash collection cycle and return rate. Last mile delivery is one of the reasons why ecommerce has not reached its full potential in the Middle East.
“I would not phrase it as placing restraints ... It is about capturing real-time information and being able to make that information accessible to all stakeholders.” (Fetchr has raised $11 million in Series A funding, led by New Enterprise Associates. This is said to be the largest US-based venture fund investment in the Middle East for a Series A round.)
Rather than leave logistics and warehousing details to thirdparties, businesses are taking it upon themselves where they feel the costs can be justified.
The Heera Group recently commissioned a production and warehousing facility at Sharjah Airport International Free Zone for its twin ecommerce ventures, one of which (Heeradeals. com, selling women’s apparel and consumer durables) has gone live. The second (heerafoodbazaar.com, for its ‘Heera’ branded food products) should go live after the summer.
“Online sales of food and grocery has not taken hold in the local marketplace ... there’s still the impression among shoppers that buying online could add to their bills,” said Dr. Nowhere Shaikh, CEO of Heera Group. “That’s what we will try to dispel when heerafoodbazaar.com goes live in the UAE, and where deliveries to the doorstep will be free of charge.
“We will absorb the logistics costs, but in the medium-term our ecommerce strategy is to build up the Heera brand and create the volumes rather than turn an immediate profit.
“That’s the reason we decided to commit to having our own production and warehousing facility (covering two floors