The Middle East may not be a region one equates with big investments, innovation and e-commerce but it’s certainly time to reconsider. The Middle East e-commerce market, expected to grow by 16.4% over the next few years according to Fitch Solutions, is growing more competitive as the number of players rises.
Indeed, according to Annual Investment Meeting (AIM) Startup, an initiative of the UAE Ministry of Economy’s National Programme for Small and Medium Enterprises and Projects that connects startups with investors, Dubai is the world’s top destination for hundreds of startups followed by New Zealand, Singapore, Norway, Germany, Japan and Sweden.
In addition, 69% of startups in the UAE are involved in e-commerce, infrastructure and software as a service and marketplaces. Of these, 52% are in B2C ventures and 93% of them are headquartered in Dubai.
However, according to online publication, Vox, the Middle East can be a difficult place to live, let alone start a business – Wars, corruption, conservative norms and regulations adverse to an independent private sector, and a historic reliance on public sector jobs - are all factors that can make it difficult to start a business, especially one that challenges the status quo. These circumstances mean that people have to innovate to solve basic problems that entrepreneurs in places such as Silicon Valley don’t have to face.
But, the potential for e-commerce is massive and is growing on a daily basis. For example, 30% of the population in the Middle East and North Africa range in age of 15 to 29. In addition, ease of access to smart phones and the internet is great. As such, this has resulted in a deep internet penetration of 64.5% in the Middle East compared to a global average of 54.5% according to Internet World Stats findings.
To meet the growing needs of e-commerce, several startups are eyeing the last mile delivery portion of the supply chain. One such company, FODEL, recently raised $2.6 million Pre-Series A funding. FODEL uses proprietary technology to build out a click & collect network. Currently the number of pick-up locations are over a 1,000 across the UAE including integration with such retailers as Choithrams and JollyChic. According to the company, parcels are tracked in real-time, and customers have full visibility and control over their shipments. FODEL plans to expand into Saudi Arabia where it already has secured over 800 pick-up locations.
Fetchr uses GPS tracking on mobile phones and delivers wherever the consumer is located. According to Fetchr, about 30-35% of packages are not delivered because the driver cannot find the customer. The company uses an algorithm to match couriers with pick-up and drop-off points. Its basic service allows customers to choose a time slot and also offers the option to drop-off a package with a receptionist or a safe space.
The company’s Fetchr Now offering can also pick up consumers’ packages in less than 45 minutes and deliver immediately to the recipient.
Continuously innovating in the last mile delivery space, this 6-year old company is now partnering with Eniverse Technologies and Skycart to create and build the first autonomous drone delivery service in the region. More to come on that project.
Established organizations such as Aramex are also innovating the last mile to meet the growing e-commerce needs of the Middle East. For example, late last year, the company introduced ‘Aramex Fleet’, a crowd-based delivery platform that connects Saudi nationals to flexible last mile delivery work to leverage Saudi Arabia’s sharing economy.
In 2016, Aramex invested in U.K. based What3Words and adopted it into its global ecommerce fulfillment operations as part of its last mile delivery strategy.
Recently Aramex conducted a study in Dubai to measure the efficiency of deliveries to regular street addresses versus 3 word addresses provided by What3Words and found that over 100 deliveries, using 3 word addresses was 42% faster and reduced the total distance travelled by delivery drivers by 22%.
There are many other companies that are innovating the Middle East’s last mile. As these companies do so, e-commerce growth will grow and spread across the region with strong backing from the region’s governments and the eagerness of a population to take part in an interconnected global commerce.