“E-commerce isn’t the cherry on the cake, it is the new cake!”
With a tax-free regime, high investment climate, growing economy and high spending urban populace, it is no wonder that Middle East has become the epicentre of all things – Ecommerce!
The emergence of the new middle class, Gen Y and western influence has meant that there is a huge clamour for global brands at the click of a mouse or tap, better still, delivered to the doorstep directly! In the cliched cat & mouse game of E-commerce sites (both sold literally) and aggregators/last mile delivery, the consumers are the winners on high price war bargains and the spoils thereof!
With mobile taking precedence on all things social, the utter need for mobility is also not lost among the majority of the consumers, breeding a growing ecosystem of first-time entrepreneurs re-imagining the new dotcom wave!
The success of home-grown E-commerce ventures like Souq.com, Dubizzle, Namshi.com, ekar, Careem and Noon.com (to name a few) have meant that Venture Capitalists are not shying away from investing their seed capital for layered scalability. Various entrepreneurial incubation centres supported by Government have paved the way for enterprising young Emiratis, to do their bit in the E-commerce space. Government investment vehicles like DIFC are serving as springboards for emerging Fintech companies quite admirably. The upcoming Dubai EXPO 2021 holds great promise in this segment, adding to startup ecosystem and representative offices in Dubai as Middle East hub.
The Covid-19 pandemic has further bolstered the digital space for retail resurgence. Quite a lot of e-commerce ventures on the verge of drawing their last shutters down, had a fresh lease of life in lockdown-induced-safety-protocoled 2020 & beyond, meaning new infusion of funds & increased revenues. This has helped drive the almost steroid laden growth trajectory and newer players.
The industry trend of 3 out of 5 E-commerce initiatives quickly folding up within 2 years has given way to M&A opportunities. Flagging revenues but high on potential firms are being lapped up as inorganic acquisitions and the Stars of the BCG Matrix landing up with multi billion deals like Uber taking out Careem and Amazon taking out Souq.com. If unicorns are looked at being mythical creatures, E-commerce provided several Unicorns shaking our conventional realities pretty quickly…it’s an unique animal inarguably!
If we go back to the 2000s era of the dot.com splash and then its abrupt bubble burst throwing all into a snowballing recession, it nearly meant a death knell for online retail then.
Besides technology limitations, incorrect assessment of market value of certain hi tech firms soaring in value though none were profitable, coupled with the slow adoption of consumers in sharing their credit card information online, the retail online business segment a gray operative. It was perceivably great as a concept, less assuring as a lifestyle choice.
Additionally, the logistical planning involved in running an eCommerce business had not fully been established. We now know that inventory planning, warehouse management, last mile logistics management, fleet management and tracking, route optimization, and providing full visibility to end-consumers are all things that are needed to make a supply chain work. Back then, businesses just didn’t understand this as a core and shell of this domain.
.
BY SANJEEV PRADHAN "ROY"
THE RISE OF ECOMMERCE IN GCC