UAE residents click on change

First there was only online shopping, regardless of the goods in the virtual cart. But as the market matures, pure play online retailers have realised that one size does not fit all. As online shopping grows, payment major PayPal estimates that e-commerce in the Middle East and North Africa (Mena) region last year was about $9billion (about Dh33billion), and is set to grow to $15 billion by 2015. Consumer behaviour, selling patterns and strategies are taking shape depending on products. Whether it is furniture, fashion, grocery or electronics being sold, retailers find that everything from how the goods are paid for, shipped or returned changes.

Focus on electronics

In physical goods, the first element in segmentation is the product itself. “In online shopping at the moment, electronics, fashion products and sporting goods are dominant. Then there are categories such as cosmetics and perfumes. For us, electronics are the focus, so much so that we are getting deeper into the category selling office equipment, scanners and now even health care products,” says Omar Kassim, Founder, JadoPado.com.

JadoPado has become the first e-tailer in the region to offer insurance on its goods in co-branded products with insurance company, Alliance — something uniquely suited to the category shoppers prefer. “We have a combination of warranty and an insurance product, where we cover accidental damage such as cracked screens and the cost of repair. We have also got an upgrade option to include anti-theft products,” says Kassim.

While JadoPado.com launched with multiple categories, including fashion, during the course of the last year it has increased focus on the category that its shoppers have taken to. On the other hand are websites that follow the flash sales model, such as Wysada.com for home interiors and MarkaVIP.com, which provides members access to private sales events with up to 70 per cent off on designer goods..

“In terms of appetite, I can tell you that there is a general interest in accessories and apparel, which are our key growth categories. In the region, because the purchasing power is higher, average order values are higher. Someone bought a $600 watch on our website. For us, electronics are not as popular. We find that even if you are selling a branded bag six to nine months after it was initially launched in the market, people are interested, whereas in case of electronics it may not make sense to buy an older version when a newer one may be more powerful,” says Eddy Farhat, Chief Strategy Officer, MarkaVIP.

Cash or credit cards?

In May this year, MarkaVIP announced a tie-up with PayPal to further enable online payments, nudging away customers from cash-on-delivery, which is more or less the norm in the region. “We take up to 21 days for delivery. With online payments you are aware that the customer is committed to receiving the order and in the state of mind where he is waiting for it. There is a psychological commitment. On the other hand, with cash-on-delivery he may have changed his mind a month later. So far, with credit cards, returns are about 5 per cent whereas with cash-on-delivery they are up to 10 per cent,” says Farhat.

Gokhan Akan, Co-Founder of Foodonclick.com, an online food delivery hub, on which members can order food from participating restaurants, says that the cash-on-delivery system works best for him. “We have enabled online payments on Yemeksepeti, our parent company in Turkey. But I’ll be surprised if it surpasses cash-on-delivery. It is the nature of this business. Our product is a very simple thing; people don’t order a pizza they don’t want,” he says.

Another element of segmentation is to deal with deliveries, particularly in a region where postal codes are not available and post office boxes are the norm. “There are special carriers such as Aramex, with whom we have a partnership to facilitate e-commerce. Many merchants have built their own logistics to address this. Many merchants have their own delivery fleets and customer support,” says Wakim.

For a merchant such as MarkaVIP, controlling the process is important. “We built our own infrastructure. More than 50 per cent of our orders are being delivered by us. That is the last point of control that allows to match the consumer experience. We have the full circle — online, call centre and delivery.”