Online shopping is fast becoming the dominant form of retail in Dubai and the wider UAE. To put that into context, in 2021 the e-commerce market in the Emirates grew by an estimated 46%.
In pursuit of providing the ultimate in convenient and hassle-free shopping experiences, retailers are confronted with an ever-growing package of consumer demands, from optimised search functionally to multiple payment options and quick checkouts.
One vital piece of the consumer e-commerce experience is delivery – aka logistics.
Delivery Yesterday
Until recently, many consumers accepted that a package might take days, or even weeks, to arrive. Post-pandemic, consumer demand for faster and more convenient delivery options has skyrocketed.
Next-day delivery is increasingly seen as the norm – even when consumers have to pay a premium for the privilege. Right now, faster-than-ever delivery services are entering the market in the form of quick commerce, which promises delivery times within the hour.
Partly catalysed by the necessity of observing social distancing restrictions, one of the biggest growth segments for delivery services is food and beverage. While demand for the dining-out experience continues to see a resurgence, consumers have also acquired a taste for quick commerce in terms of menu choices, order tracking, and precise delivery times.
According to Statista, the UAE continues to lead the Middle East in this sector. There is still an appetite for fast and convenient food delivery. Legacy business models such as cloud kitchens are evolving increasingly sophisticated strategies that continue to cater to the stay-at-home market, often leveraging partnerships with third-party delivery operators.
Moreover, quick commerce for food and beverage is big business in Dubai and the wider MENA region. Some experts believe it now accounts for 15% of the digital economy. However, behind every great quick commerce operation, there’s a fast and effective delivery service. In other words, success hangs on the efficiency and timeliness of deliveries.
Put simply, fast delivery times and reliable service are two of the things that matter most to consumers. This expectation for expedited delivery also extends beyond freshly-prepared meals to everyday groceries. In fact, for growing numbers of consumers in the UAE, quick commerce – also known as rapid grocery delivery service – is the new corner shop.
With major players such as Talabat and Deliveroo able to deliver groceries within just 20 minutes, it’s increasingly becoming the go-to option for convenient last-minute purchases such as forgotten ingredients or food and drink for impromptu social gatherings.
Delivery Tomorrow
Convenience is where quick commerce meets the corner shop. So will the two co-exist in harmony, collaborate, or compete? There’s still a lot of going for the neighbourhood store. It may not have the biggest stock selection, but if you’re passing by or live a short walk away, it’s a convenience that’s hard to beat.
Another legacy of the pandemic is that an increasing number of local stores offer delivery services. While they might not always have everything in stock, orders are minutes away on foot or by bicycle. Serving an immediate local community, these outlets also have the chance to create a more personal relationship with customers and offer a more bespoke service.
One obvious direction for local convenience stores is to pair their offering with digital technology to deliver relevant services to their customers. Looking at it from the viewpoint of quick commerce, the fastest route to even quicker delivery times might be to partner with local stores.
Without said, quick commerce is already heavily dependent on third-party, last-mile delivery services. So partnering with corner shops makes sense.
This business model would also offer a more sustainable solution by encouraging shorter, more environmentally friendly delivery services by bike or on foot. Of course, the popularity of quick commerce also presents business opportunities for other essential and non-essential items. Think of the possibilities for medicine which could be at the door in minutes when someone needs it the most. Or even fashion, delivering the goods when an item is needed last minute.
Importantly, whatever it is that’s being delivered, it’s in seamless and streamlined last-mile delivery services where opportunities for innovation lie – from click-and-collect and digital lockers to micro-distribution centres and delivery automation. For example, UAE tech startup Fodel offers an alternative to home delivery via an extensive network of pickup and dropoff locations.
Delivery also offers multiple entrepreneurial opportunities for tech-savvy startups. Digital tools for things like inventory management and route scheduling can help to dramatically improve delivery efficiency. At the same time, there’s a need for tech that helps to streamline supply chains and optimise picking and packing operations.
Cutting-edge tech can also play its part in making deliveries more sustainable and cost-effective. From autonomous driving vehicles and all-electric fleets to delivery by drone, there are plenty of entrepreneurial opportunities for the implementation of innovative delivery solutions.
Future Delivery
What’s surprising about the rise of e-commerce is that physical retail has always been strong in the UAE. Not only does this point to a shift in regional consumer shopping habits, it also reflects a global trend for growth in the e-commerce sector.
In fact, the average annual growth rate for e-commerce is forecast to be around 10% over the next few years. And as one of the world’s premium retail destinations, that’s good news for entrepreneurs and business owners looking to tap into the delivery market in Dubai and the rest of the Gulf region. Especially when you consider that Internet penetration in the UAE stood at 99% in 2022. That’s a potential e-commerce market of nearly 10 million Internet users. Which is not to say that UAE, and in particular, Dubai, cannot still capitalise on its established status as a premium physical retail destination.
E-commerce can enhance the physical offering with digital services that improve the entire customer experience, including new and innovative delivery models in the last mile.
From physical stores looking to complement their business with online services to online retailers seeking new models that improve their last-mile delivery experience, retail in all its forms presents opportunities for tech-savvy entrepreneurs with an eye on delivering exceptional delivery solutions.
