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Amazon's largest delivery station in Abu Dhabi opens ahead of Prime Day

Centre will provide speedy services in the capital and create hundreds of jobs

Alvin R Cabral
Alvin R Cabral

June 23, 2022

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Amazon, the world's biggest online marketplace, opened its largest delivery station in Abu Dhabi as it continues to scale up operations.

The 4,700-square-metre centre — the company's second-largest in the UAE — provides same-day and one-day delivery services to its customers in Abu Dhabi.

It also comes in the lead-up to next month's Prime Day — Amazon's annual mega-sale event exclusively for Prime members — during which orders and deliveries increase sharply, the Seattle-based company said on Thursday.

The centre will create hundreds of jobs that Amazon says will help to shape the future of commerce in the UAE.

All employees will be eligible for training programmes meant at upskilling their talent to be prepared for the future of the sector, the company said.

“Built within Abu Dhabi’s ecosystem of innovation, our new delivery station brings world-class last-mile technology to the logistics and supply chain sector in the capital,” said Prashant Saran, director of operations for Amazon in the Mena region.

“The range of jobs at this facility will help to nurture the city’s talent pool and prepare them for the digital future that Abu Dhabi is striding towards.”

Amazon is the largest e-commerce player in the UAE, with net sales of about $500 million in 2021, data from ecommerceDB shows.

Namshi, the e-commerce unit of Dubai's Emaar Malls, was second with $249m while Noon, the portal backed by Emaar founder Mohamed Alabbar and Saudi Arabia's Public Investment Fund, was next with $169m.

Globally, Amazon is facing several headwinds, including supply chain glitches, rising inflation and the challenge of labour unions in the US, not to mention a slowdown in overall revenue.

The company reported its first quarterly loss in seven years in April and projected sluggish second-quarter sales growth as the gains it made during the Covid-19 pandemic, which supercharged the delivery and logistics sectors, started to wane.

However, the UAE presents a big opportunity for the company, with the country's e-commerce sector forecast to grow 60 per cent to more than $8 billion by 2025, from 2021, and as consumers across the region continue to shift towards online retail, according to a recent report by Euromonitor International.

Amazon's newest centre is a follow-up to its announcement in November about building the Middle East's most technologically advanced warehouse in Abu Dhabi through a partnership with the Abu Dhabi Investment Office.

Amazon's new delivery station in Abu Dhabi. The UAE represents a big opportunity for the company as the e-commerce sector is forecast to increase 60 per cent to more than $8 billion by 2025. Photo: Amazon
Amazon's new delivery station in Abu Dhabi. The UAE represents a big opportunity for the company as the e-commerce sector is forecast to increase 60 per cent to more than $8 billion by 2025. Photo: Amazon

The 175,000-square-metre site, which would be the largest in Abu Dhabi once it opens, is expected to be completed by 2023, Amazon said on Thursday.

It will also create thousands of jobs and drive innovation in logistics, as well as give local entrepreneurs and retailers access to new markets through Amazon.

“We pride ourselves on working alongside partners such as the Abu Dhabi Investment Office, who share our focus on innovation and providing the right resources and logistics to enable businesses and talent in Abu Dhabi to excel in the digital economy,” Ronaldo Mouchawar, vice president of Amazon Mena, said.

The Amazon-Adio partnership reflects the ease of doing business in Abu Dhabi and the long-term growth opportunities available in the emirate, said Abdulla AlShamsi, acting director general of Adio.

“Amazon supports our vision for sustained investment in innovation and is bringing the latest logistics technologies to the region. The opening of Amazon’s new delivery station and planned fulfilment centre in 2023 will establish Abu Dhabi as a major global hub for e-commerce and logistics,” he said.

Amazon's new delivery centre will also serve Abu Dhabi's outer areas, including Al Samha, Al Shawamekh, Yas Island, Saadiyat Islands, Bani Yas and Al Wathba.

The company, founded by billionaire Jeff Bezos, continues to invest in the UAE, especially in employee safety, owing to the Covid-19 pandemic.

Amazon said it has invested more than $15bn in pandemic-related measures globally.

Earlier this month, the company announced that it would start to use drones to deliver some purchases to US customers later this year, starting in parts of California.

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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.”

Updated: June 23, 2022, 1:21 PM
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