E-commerce platforms set sights on UAE's food and beverage market
Established food delivery companies can charge a commission fee of almost 30-35% per transaction, leaving many restaurants struggling to turn a small profit.
E-commerce platforms have expressed an interest in entering the UAE's food and beverage market, an action which, experts say, will help to strengthen the sector and help customers become closer to their favourite restaurants.
Bhanu Pratap Rathore, managing partner at GrowthX Advisors, noted that the Covid-19 pandemic has, in effect, accelerated the share and growth of home delivery segment for F&B, services and other essentials.
"It is very interesting to see non-food aggregators and established e-commerce platforms extending their reach to F&B and services, and existing food aggregators venturing into new segments alike to be more relevant to the consumer," he said.
He explained that the entry of organised players into the fray will only benefit the F&B segment as they, in addition to working with food aggregators, are putting effort into reaching out to their consumers either directly or via alternate online platforms.
"The overall ecosystem on the last mile delivery or supply end will only strengthen, where they will have the opportunity to generate orders and service them at a fair cost which will eventually reduce their dependence on the food aggregators," Rathore said.
Global e-commerce platform, Hubb, recently announced its entry into the UAE's food and beverage market in a move that is designed to help restaurants that are struggling with the high prices charged by third-party aggregators.
"There is no doubt that food delivery apps and aggregators open the doors to a whole new realm of clientele for restaurants across the city and beyond," said Anastasia El Hage, founder and CEO of Hubb.
However, she noted that the current model is not sustainable, with mediators eating into a huge percentage of restaurants profits. "In the wake of the global pandemic, independent restaurants in particular are struggling to turn a profit and are looking for more cost-effective ways to reach their customers - especially via online food delivery services and home delivery services. Our mission is to endorse and help all businesses, whether big or small, to grow, meet their customers' demands and enjoy a higher percentage of their profits by registering with us at a minimal cost per month."
According to a recent analysis by Frost & Sullivan, the food and beverage market in the Kingdom of Saudi Arabia and the UAE will register steady growth throughout 2020. The overall expenditure on F&B in the UAE is estimated to increase by 6.9 per cent year-on-year to reach $37 billion in 2020, from $34.6 billion in 2019.
Hubb is looking to introduce a more sustainable business model in a market where several established food delivery companies are charging a commission fee of 30-35 per cent per transaction. Hubb has announced a monthly subscription fee of Dh50 with no added commission. This subscription fee is valid until the end of the year, after which it will be revised to Dh100 per month. In addition, restaurants that are signing up before September 15 this year, can do so for free.
Restaurants that sign up for the service can enjoy a platform that acts as a meeting place between restaurants and customers, while also creating a space where restaurants can distribute menus, dishes, ingredients, and more by simply downloading the terminal and subscribing to Hubb.
As well as charging high commission fees, food aggregators also hold onto valuable customer data, making it difficult for restaurants to market directly to customers. Hubb encourages restaurants to build long-term relationships with customers, rather than seeing them as simply a 'transaction' through a third-party portal, whilst also providing the necessary marketing tools to stand out from the crowd.
Restaurants that sign up to Hubb will have the option of using their own delivery drivers, to ensure that all profit goes to them, or after September 15, Hubb will provide restaurants with a third-party food delivery service option to provide a convenient and accessible service for all.