Ecommerce Trends: Shipping and Fulfillment
With more shipping boxes on doorsteps, packages on trucks and products in the air than ever before, the global ecommerce sector is booming – and the Middle East is no exception.
According to market trends, more than a quarter of Middle Eastern consumers now shop online every month. 36 percent of shoppers between the ages of 18 and 24 shop online at least once a month, a substantial increase from previous generations.
Better pricing, product selection and convenience are often listed by these customers as the reason for selecting ecommerce over traditional brick and mortar purchases. With increasingly more youth than previously in most Middle Eastern countries, these trends are only expected to continue.
As covered in previous posts, there are various issues surrounding ecommerce that make this rising market more complicated in the Middle East than in other countries or regions. In many ways, shipping and fulfillment options are the key to unlocking the large potential market of ecommerce customers in the Middle East, as logistics are the main obstacle holding this market back.
In the Middle East, trends show that 56 percent of shoppers report using their mobile devices for shopping, with 52 percent disclosing that they use social media to read and place product reviews. As such, it is critical that emerging businesses place a high priority on choosing reliable partners for outsourcing product delivery, shipping and management.
Preferred Shippers and Fulfillment Services: Finding Your Perfect Fit
With market trends booming, new figures show that 58 percent of products purchased online by Middle Eastern shoppers were from overseas vendors. In addition, it was found that 80 percent of online shopping in the Middle East is done using cash-on-delivery (COD).
A previous post on this blog outlined multiple ways in which customers and markets in the Middle East might present special challenges. The incredibly young and dynamic market of buyers creates a potentially huge market of loyal customers, which can be leveraged by the smart business owner.
With the above in mind, signing the right fulfillment and shipping contracts is crucial to capturing the right market for your company. Below are some popular potential options for finding the perfect shipping or fulfillment partner to meet your sales and growth targets.
Fulfilled by Souq
The obvious giant holding the majority market share in terms of online fulfillment globally is, of course, Amazon. The company is reported to fulfill over 1.2 billion items per year with a market share of 40 percent – and it is expected to reach 50 percent by 2021.
Amazon has expressed a desire to work on underwater or underground fulfillment centers in the future, with plans to expand into regions of the world where such options might be cheaper, safer and more effective. Acting on these intentions, Amazon extended its hand into the Middle Eastern market through its purchase of Souq.com, previously an e-bidding site which subsequently evolved into “Fulfilled by Souq,” an Amazon-affiliated company.
The service consists of an ecommerce platform that allows merchants to fulfill their orders while freeing online sellers from the time and resources needed to pack, ship and store goods – not to mention providing customer support. It is truly one of these easiest Middle East dropshipping options out there.
The service is cost-effective and marks specified products with a special badge on their app. It also provides a filter allowing vendors to differentiate between products and ensure better awareness and outreach to customers.
This function makes it easy for Souq.com to prioritize customers’ needs in delivery, especially for areas not reachable by traditional maps. It also ensures that products are delivered successfully with the option of fast and safe returns, coupled with impeccable customer support.
The company features over 1.5 million products in 31 categories, including consumer electronics, fashion, health and beauty, and children’s clothing. Souq.com attracts above 45 million visits monthly, and offers localized operation services within Egypt, the UAE and Saudi Arabia. Fulfilled by Souq is a partner worth considering for shippers aiming to capture the logistics and shipping market in the region.
Amazon itself also presents an option for some vendors looking to sell and ship within the Middle East, and it is working on expanding its model across the market.
For vendors, Amazon offers a user-friendly guide on how to set up a Fulfilled by Amazon (FBA) account. From there, vendors need only to create product listings, which can be done in bulk or separately, or by integrating the vendor’s inventory-management software with Amazon’s API.
Finally, it is a matter of getting products ready for ecommerce in preparation for transportation from the vendor to the customer. Amazon even offers an optional preferred preparation and shipping supply service for vendors.
After that, products are shipped using the vendor’s individual shipping plans. Customers order the vendor’s products and Amazon ships them – while offering 24/7 customer service support.
Amazon introduced its Amazon Global Store in December of 2016 exclusively aimed at customers in the UAE, offering more than a million products such as watches, shoes and homeware. This paved the way for exciting years to come with partnerships between more local companies and Amazon’s fulfillment services in the Middle East.
In short, Fulfillment by Amazon can be a great option for vendors shipping and working within the Middle East for the first time, assisted by Amazon’s extensive experience and network in the shipping and fulfillment sector.
Arguably one of the most well-known shipping companies in the Middle East, Dubai-based Aramex was founded by Fadi Ghandour and Bill Kingston in the early 1980s, and continues to expand internationally to this day.
Aramex currently employs 13,800 people in over 54 countries and consists of a network of over 40 independent partners. The company boasts revenue exceeding 1.18 billion dollars per year, and is expanding quickly into the sector of ecommerce, transportation and logistics.
Aramex has grown by 10 percent due to strong growth in cross-border ecommerce across most regions. Companies like Aramex continue to develop their ecommerce activities by establishing their own fulfillment centers in core markets. Aramex has even begun the process of expanding into underserved markets including sub-Saharan Africa and smaller regions throughout New Zealand, Australia and Southeast Asia.
Independent Shipping: Start-Ups
Smaller and more niche companies, such as those hosted on Etsy and other small retail sites are also expanding into the fulfillment and warehouse sector in the Middle East, with new and exciting results. An example is the online boutique Little Wren, a personal brand launched and operated by founder and creative director Aisha Alkhaja, who was until this year based in the UK.
Alkhaja recently announced her intention to relocate back home to the United Arab Emirates, where she plans on expanding the brand. It currently stocks products by Krome Kids, Max and the Star, Me & Hayari, Kukukids, and Hippy Chick. A homegrown Emerati woman, Alkhaja, like many other Middle Eastern entrepreneurs, has also announced her plans to open a warehouse and partner with local logistics and shipping services. Other companies such as the fashion start-up Ora La Moda have followed suit.
Market statistics for shopping in the region show that 54 percent of products bought through third-party shippers are books, music, and video games, 48 percent health and beauty, and 44 percent consumer electronics and computer supplies. Following individual market trends will be critical to vendors that want to establish the best choice of logistics partners for their businesses. Success will also hinge on assessments made based on each company’s targeted audience and market share.
An exciting new competitor, the ecommerce giant Noon.com partnered with this fulfillment service in 2017. The arrangement allows Saudis to buy goods online and have them delivered to their home.
In partnership with eBay, Fetchr has been launched in the UAE and Saudi Arabia by way of an independent app and is attempting to access new marketing opportunities that are shared between the two companies.
Noon plans to offer product assortments that exceed 20 million stock keeping units (SKUs). A partnership with eBay’s shopping service, as well as a variety of other independent vendors, will allow this business to expand even further. The app will continue to expand into Jordan, Oman, and other markets after reporting a $41 million funding round.
Founder and CEO Idriss Rifai has indicated a planned expansion to accommodate technical staff for geographic expansion in the region, adding to an already 1,500-person workforce. The partnership allows the company to bridge the gap between traditional ecommerce based on home address delivery and the common issue of address uncertainty in the Middle East by allowing customers to have their smartphones geolocation tracked using similar technologies to those used by ride sharing apps, Uber and Kareem.
This longstanding shipping and service company offers a more traditional model for order fulfillment. This is supported by a range of other logistics services to both companies and individuals shipping, ordering, importing and exporting in the UAE, Iraq, and other locations in the Middle East.
Now featuring the largest and most technologically efficient cash-on-delivery system in the region, TMF Express also offers import and export services, as well as deliveries and bulk shipment of products. This one-stop shop could prove an excellent choice for vendors looking to expand operations into the region, and to continue delivery and cash-on-delivery services following the establishment of a business model in the region.
A globally-based logistics company, Q8 Miles has expanded its excellent Kuwait-based model of shipping into other areas of the region and world, including Morocco and Canada. Order fulfillment services utilize the company’s years of experience in top of the line packing and shipping services, and the company has streamlined its model into the order fulfilment sector.
Q8 Miles is also rare in its offering of services with no monthly minimum on transactions, making the platform ideal for newer emerging companies wishing to ship their products to new customers in the region. Its Kuwait or Morocco-based fulfillment centers offer comprehensive estimate services to allow each order to be accurately gauged for size and price, with excellent results.
Written by: Eliza Campbell