Souq.com hopes to make online shopping faster as the internet retailer is adopting a new platform and delivery system similar to that used by the US online giant Amazon.
Souq.com, which has its headquarters in the UAE but sells hundreds of thousands of items to nearby countries including Saudi Arabia, Kuwait and Jordan, says it is launching an online platform next month while fast-tracking delivery up from an average of three to five days.
"We're working [hard] to cut that … to make it two days," said Ronaldo Mouchawar, the chief executive.
When the retailer started up in this region it initially focused on promoting an eBay-like business model in which goods could be auctioned to the highest bidder. But as shopping habits changed, Souq.com started setting fixed prices last year and let businesses ship goods once shoppers made their purchases.
More recently, it has been investing undisclosed sums in warehousing goods in the UAE, Saudi Arabia and Kuwait, as well as new technology and employees to manage the logistics side of its business.
These warehouses are now key to the company's strategy for slashing shipping time, which mirrors an approach taken by Amazon.
A warehouse is planned to open during this quarter in Egypt. "We're working on Cairo," Mr Mouchawar said.
"The Dubai one is operational, fully, shipping hundreds of thousands of products a month. Same with Riyadh."
Shoppers in the Emirates spent an estimated US$2.8 billion (Dh10.28bn) on products and services that were purchased online last year, according to data from Visa Middle East in partnership with IMRG, an independent researcher.
Visa forecasts a 40 per cent rise in e-commerce spending this year, although Mr Mouchawar says sales at Souq.com have approximately tripled so far this quarter compared with the same period a year ago.
More online retailers are trying to expand their presence in the UAE, and sometimes the wider Middle East region.
These retailers include Nahel.com, JadoPado.com, ALshop.com and EmiratesAvenue.com.
To stand out from each other, these companies promote all sorts of offers, from bundled specials to "daily deals" with an emphasis on cash-on-delivery, for those consumers who are still hesitant about sharing their credit card details online.
Fast delivery has become another way to stand out from the pack.
But Mr Mouchawar noted that speedy shipping was not enough, which is why the company was also rolling out more product descriptions in Arabic, as well as more detailed specifications about devices such as BlackBerrys in case buyers forget to note all the particulars such as screen size, weight and keyboard type.
"We've invested over the last year in terms of improving what we call the content presentation," Mr Mouchawar said. "With this content investment [the shopping experience] will improve."
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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