Dubai: Online grocery retailers in the UAE and Saudi Arabia have a compelling reason for their shoppers — allow them to carry those heavy bags. And deliver them direct to the homes. Of course, online shoppers can have other fringe benefits as well.
Here’s what Emitech Technical Services had to say when it launched its shopinc.com portal in the UAE — “No more getting held up in traffic, waiting for parking spots, waiting in long payment queues, difficulty in spotting the prices of the products...”
Or as Rahul Duragkar, CEO of Shopinc.com, puts it, “bridge the gap between customers and their daily requirement”.
Convenience is a message that wadi.com’s managing director and co-founder, Pratik Gupta, keeps repeating.
“We found there’s huge need gap for online grocery services in the Gulf. Traffic jams are something that everyone wants to avoid in the big cities, more so when having to shop and carry their groceries.
“Since we launched grocery delivery in three Saudi cities this year, we found shoppers are willing to pay a premium on the service. They don’t mind the shipping or cash-on-delivery fees — provided they are able to get their deliveries between 30 minutes to two hours.
“One of the biggest factors holding back online grocery demand in the Gulf had to do with freshness. Many want to pick their own fruits and veggies at the store. This is the culture that we want to change — that’s is why we have our own people trained to handpick in line with what a customer would do.”
Wadi.com — which has been operating a generic e-commerce portal since 2015 — decided to go in for a stand-alone app for its grocery buying and delivery services. The plan is to stretch out the coverage to other Saudi cities and then take it into the UAE.
The Lulu Group last week confirmed that it will go wide with an omni-channel delivery service in the UAE by the fourth quarter, whereby a shopper can make a purchase online and then pick it up from a designated Lulu hypermarket at his convenience. This will mark its biggest push to date into the online retailing universe.
Souq.com and noon.com already have their supermarket/grocery verticals listed on their portals, while it is an online space of extreme interest for new entrants such as shopinc.com and the Sun & Sand Group.
“We are initially taking grocery-specific orders via WhatsApp and the portal before launching a dedicated app under the ‘Qiso’ branding,” said Sailesh Israni, director at Sun & Sand.
“A smartphone user in the UAE already has so many apps on his handset — it would have been difficult for us to launch one and hope shoppers start downloading it immediately. We will first need to establish an identity and trackrecord of quality and delivery. For the app, the launch should be by September.
“Our strategy is quite straightforward — have the shortest possible delivery times on the freshest produce. If we can ensure that consistently, we can build up a dedicated shopper base, first within a couple of neighbourhoods — Dubai Silicon Oasis initially — and then beyond that. Convenience shopping will always have its takers.”
Based on market feedback, online grocery and fast-moving consumer goods sales shot up significantly during the Ramadan period. Online shopping portals did their part by going aggressively on pricing and even extending their delivery schedules.
“We had deliveries right up to 3am during these weeks,” said Gupta. “Shoppers are also given price comparisons of each product with the top 10 or more online and offline grocery players. Online grocery is the next big thing in the Gulf — no one has yet dominated this space so far. That’s why you have 10-12 small players launching in Saudi Arabia in a short time. We hope that our 15 million customer base built through wadi.com will be decisive in the months ahead. Our internal forecasts suggest reaching breakeven on the grocery side in another two to three years.”
An online market ripe for the plucking
Why is it that online grocery retailing has suddenly turned so important for portals in the Gulf? Because unlike some of the other categories, this occupies a small base as of now.
Market sources suggest that online grocery sales in the UAE make up only 1 per cent of the overall B2C (business to consumer) shopping done via portals. This year, the UAE’s overall online shopping volume is expected to cross $10 billion.
As for Saudi Arabia, “online grocery would be only 0.2 per cent, but we could see that doubling or even tripling in the next one or two years,” said Pratik Gupta of wadi.com. “Compare that with India or China, where it would be 1-3 per cent. In the US and UK, it would be higher.
“The UAE and Saudi Arabia would be natural fits for higher online grocery sales, just because of the sheer size of smartphone penetration.”