Evolution of the e-commerce market
More businesses are moving online to capitalise on the region's growing e-commerce market.
Ikea and Lulu plan to launch online payment portals and delivery services this year, while Panasonic recently created its own.
But how have some of the more established online firms that helped to create the local e-commerce space fared in recent times? The top executives behind Souq.com, Nahel.com and ALshop.com explain how the market has evolved and what hurdles are still preventing it from growing into a much more robust industry within the region.
q What was the biggest hurdle to growing your business at its onset?
Ronaldo Mouchawar, the chief executive of Souq.com: When we started we had many hurdles. Buyers didn't have a habit of shopping on the internet. The delivery and shipping was an issue. Getting people to list items was an issue. In 2005, the [industry] was very young and immature.
Saeid Hejazi, the managing director and founder of Nahel.com: For us, the biggest hurdle at the beginning was getting suppliers. E-commerce had barely gotten started, so [the challenge] was getting products to sell on the internet. Everyone was very accustomed to the offline model, and they believed that was the way the UAE consumer would be.
Sheriff Rizwan, the chief executive and founder of ALshop.com: We had a reality check about six months [in]. We did come across a hurdle of [not having enough] volume sales. The initial thing was to increase our volumes, which we eventually did, and focus more on new markets and categories of products.
How were online sales affected as consumers cut spending during the downturn?
RM: We used to sell unique mobile numbers at a premium. We saw a drop in those. Consumers would search more for particular brands. People really wanted to get stuff and [went] online if they could compare [prices]. Most of the categories did not see a big drop.
SH: We didn't get hit. E-commerce tends to grow as the economy takes a hit, because people look online to save their money. The same thing applies whether it's the West or here.
SR: To be honest, in 2009 when the pullback started, it was a good year for us, because people were looking for a good bargain and we went out there and started selling products for Dh300 (US$81) and Dh500 less than [brick-and-mortar] retail.
How are you changing your business now to adapt to changing consumer tastes?
RM: We're seeing a broadening of the categories as we grow. The non-electronics categories is where we're seeing quite a bit of an uptick. This is a new consumer coming in that's not so tech-oriented but more [into] lifestyle products. This is a really healthy sign for e-commerce and gives us more access to women and housewives.
SH: Right now, our focus has been on scaling the company. All your suppliers and logistics companies have to be prepared. We've had times when orders have increased greatly in a matter of weeks. That scaling has been the top concern for us lately.
SR: Well, we have made sure all of our products are easily accessible from smartphone and portable devices. We are making sure we come up with software [to stay] in constant touch with our customers, [and] we're making it easier and simpler for new customers to reach us in terms of social networking or group buying sites.
What obstacle remains in creating a more robust e-commerce industry in this region?
RM: We're working on two major initiatives. One is increased buyer trust and awareness of e-commerce. As long as not everyone is shopping online, we have a ways to go. We're [also] putting a lot more effort [into] details of the listing and technical specs of the products so buyers really find the products and [are] able to make an informed decision.
SH: There are tons of logistics problems we face with our international shipping. You have different countries with different import laws and duties, and certain countries where laws are changing constantly. It's tough to understand what products can go through, and what can't, and charging the right amounts.
SR: The payment gateway, although it is working for us in terms of credit cards on delivery. But if our payment gateways were three quarters as advanced as Western, Asian or European countries, things would be a lot faster and the e-commerce industry would be much better than what it is today.
Published: August 1, 2011 04:00 AM