Amol Kadam explores the challenges faced by online retailers, and how to take pole position in the growing industry.
We have seen some game-changing developments in the e-commerce industry in the region of late – two significant events in this time were the entry of Amazon with Souq, and Noon taking over JadoPado.
It was reported during the Amazon deal that e-commerce accounts for just 2 per cent of retail sales in the Middle East, while according to a report published by BMI Research, the Middle East is one of the fastest-growing e-commerce markets in the world. The report also projects that the sales volume of this region will expand to $22.3bn by 2020.
But when looking at the current state of the market, Gartner reports that only 15-18 per cent of businesses in the region have an online presence and 90 per cent of online shopping import products from outside the region. These numbers show the challenges and the opportunities that lie ahead for the online retailers.
I believe many of these issues or challenges are related to the users, but ultimately, they unearth some real business challenges.
I want the best price, always – users’ motivation to go online
You may think ‘how would user motivation be a challenge for the e-commerce industry?’ The problem is that motivation – if wrongly placed – can work against the industry’s growth.
As per PwC’s 2017 e-commerce report, 40 per cent of respondents in the region said ‘cheaper price’ is the biggest motivation to buy online. Outside the region ‘convenience’ has always been the biggest motivation.
It's known that e-commerce stores incur less overhead costs and can pass on those savings to shoppers. However, at this stage of the industry and for its growth this motivation is pulling the industry into the wrong lane. The fight seems to be to become the cheapest online store, whereas other factors such as service and end-to-end user experience are lower on the priority-list for business owners.
I want it now – logistics and delivery
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