Logistics a key catalyst for UAE e-commerce

Very large players have a significant volume of shipments to be able to support an in-house delivery and logistics network.

The UAE e-commerce market is poised to grow to $17.8 billion in 2020, and the logistics providers they choose will play a key role in the exponential growth of online shopping, according to industry specialists.
Average annual online spend per-capita in the UAE is around $300, significantly higher than Saudi Arabia at $90 and France at $94, according to UK-based consultancy firm Business Monitor International (BMI).
Online shopping is growing faster in the UAE than other countries. The UAE currently ranks 33rd in the world in terms of the size of its e-commerce market. The country is also a leading emerging market player in the logistics industry as the country ranks first in the Gulf region and third globally after China and India, according to the latest Emerging Markets Logistics Index.
"The aggressive growth of the e-commerce market in the UAE increases demand for professionally qualified logistics service providers to meet the logistics requirements of their customers," said Shailesh Dash, chairman of Gulf Pinnacle Logistics.
More than 80 per cent of the UAE's 8.2 million Internet users make purchases online, according to the annual report of Admitad, a global affiliate network. With the rise of digital retail platforms such as Namshi, Noon, Ounass, Amazon.ae (formerly Souq.com) and several others, the UAE's e-commerce market is estimated to be worth an astounding $27.1 billion by the year 2022, the Admitad report found.
Many e-commerce giants have realised and tied the importance of a reliable, efficient and timely logistics system to their own success. Hence, those e-commerce giants who can afford vertical integration, started to either acquire state-of-the-art logistics providers or build a logistics arm internally to ensure a reliable, speedy, on-time, delivery services to their clients.
For example, Amazon in the US has established its own warehouses and plane delivery network, and are even purchasing abandoned malls in densely-populated areas which are treated as fulfillment centres to reduce delivery times.
In contrast to the very large players who have a significant volume of shipments to be able to support an in-house delivery and logistics network, medium- and small-sized e-commerce players still seek an external vendor.
In order to retain existing customers by offering them an exceptional delivery service and attract new ones, some e-retailers offer free or low-cost shipping for many products. None of this is possible without logistics management, as it is the cornerstone of the e-commerce industry.
"It is in the best interest of the e-commerce players to entail professional logistics service which would result in faster growth, success and dynamism for the company," said Turab Ur Rahman, general manager of the last-mile division of Gulf Pinnacle Logistics.
BMI forecasts e-commerce market in the Middle East to be worth $48.6 billion in 2022, up from an estimated $26.9 billion in 2018.
An estimated $51 billion of e-commerce sales were registered across the Middle East, North Africa and South Asia in 2017, according to new research launched by Dubai CommerCity.
E-commerce is fuelling logistics opportunities and reputed logistics companies will grab the opportunities and grow their businesses in the UAE as well as in the region, Dash said.
- business@khaleejtimes.com