Local online vendors need to target bargain chasers

As online eCommerce attempts to replicate traditional retail delivery channels, two important variables may perhaps shape the industry in Dubai in the next year. The first is the proliferation of delivery channels available online; the second is the nature of the platform itself.

Examining these two may well accelerate the shape-changing trends in the industry for niche players even as larger players enter.

In the US, more than 57 per cent now purchase online. This number jumps even further (66 per cent) when millennials are taken into account, even as the number of retail outlets that sell online are at slightly over 28 per cent.

This implies that for the most part, whilst the brands and newer businesses have embraced online selling channels, there still appears to be a vast majority of retailers that have not been able to successfully enter the space. A similar trend — on a much larger scale perhaps — is evident in the region.

While online market places have proliferated, perhaps what has not yet been tapped into is the concept of a “flea market” and related bargain/discount store concepts, which attract tremendous footfall in the traditional retail space. Clearly, what is as important as the price variable, is the experience itself — from the ease of shopping to the after-sales customer service.

What makes it more nuanced in melting pots like the UAE is the multilingual community which hinders the experience of diverse ethnic groups to interact online. This potentially has a solution in the form of “chatbots” that will increasingly be able to cater to various languages.

Even as we zone out of the technological solution, the fact remains that in the eCommerce space, there are a multitude of offerings at the upper end of the retail spectrum. The lack of a viable platform at the lower end remains the challenge for 2017 and beyond.

Equally important are the delivery platforms under which people are comfortable ordering. With social media dominating the zeitgeist, retailers have started to respond by allowing customers to order online through Facebook messenger, Kik, Slack, WhatsApp, Snapchat and Instagram, thereby replicating in many ways the experience of traditional shopping in getting instantaneous feedback from their friends and associates.

This trend is expected to accelerate in 2017, and given that online retail shopping is expected to surge, will see a fusion of chatbot technology through these various retail platforms.

Unsurprisingly, in the UAE, at the lower end of the spectrum, retail merchants have had surprising success in selling through online platforms such as Facebook. And in a convergence trend, the same is being witnessed in America and Mexico. In certain sectors like the F&B industry, this is already the case, with Burger King and McDonalds taking orders through Facebook Messenger.

In the UAE, these trends are expected to be adopted with increasing frequency, especially given the high levels of penetration in the social media space. Surprisingly, this has thus far not been witnessed among the millennials as much as in the lower end of the income spectrum.

On closer scrutiny, this is perhaps intuitive, given the lower barriers to entry in terms of establishing a social media presence in these channels.

However, experience in online transactions indicates a varied and evolutionary feedback mechanism. And one that is expected to further mutate as an increasingly diverse array of channels continue to crop up to engage the online community.

The challenge remains to make the online platforms mainstream as a way of augmenting traditional retail. Traditional models adopted thus far have mainly been upstream selling — retailers having an online presence to increase sales channels.

Data suggests that this strategy has been largely unsuccessful thus far. It appears that it is only a mix of price-sensitive platforms fused with sophisticated after-sales channels that will permeate the consciousness of the mainstream buyer.

— The writer heads the online division at GCP.