Dubai: More shoppers in the UAE are looking to online for their daily needs or indulgences – and that has been so since March of 2020 when the world and life changed forever. But for all those shopping portals in the UAE and the Gulf that recorded new highs every month or so, Dharmin Ved has a word of caution.
The CEO of 6thstreet - the site for fashion to footwear and a lot more besides – believes what worked in 2020 need not come up with the same results going forward. And he makes one succinct point to e-tailers – check your pricing.
“The rest of the online competition is constantly jostling on discounts,” said Ved, who was one of the founding members of the shopping site when it launched in 2015 and then became its CEO. “Because when you are on constant discounts, it becomes very difficult to get back to full pricing of what you are selling. Long-term sustainable growth [for the business] depends on the price that it’s being given at.
“If sites keep giving discounts all the time, the day you actually start to increase prices, a sizeable section of your shopper base will not return.”
Need to get timing right
How to manage that switch – from the constant discounting of last year to more ‘normal’ pricing – is what weighing on the minds of e-tailers. Selling at any cost will not become feasible at some point soon. And brands and vendors associated with these portals too will not want their pricing affected by the instant discounts or offers on their merchandise.
6thstreet.com went back to full pricing from November last, on seeing that UAE’s shoppers were adjusting to the ‘new normal’ of COVID-19 infected times. Ved says that during the March to November phase, there was no option for any retailer other than to slash prices and hope shoppers out there would return to make a buy.
Managing the uncertainty
“There was so much uncertainty everywhere and no one knew when the business might pick up again,” he said. “Everyone had inventory that was sitting with them for a long time and they were not sure how to liquidate. The discounts and offers were about making sure the stock liquidation happened.
“The focus of retailers was very much in supporting the brands in getting their products out of the stores and warehouses. But we were very clear as soon as November finished - which was the big month of sales - we went to full price. Because we saw stability coming into market by that time. We had cleared what had to be done with our inventory.”
More steady than spectacular
There are other reasons why retailers – online and physical – will need a rethink on their ‘always a discount’ strategy. If 2020 – or at least from March onwards, when lockdowns were brought in to tackle the COVID-19 spread – delivered month-on-month sales gains for online sellers, those numbers are stabilizing now.
The spectacular high double-digit growth rates are stabilizing, and will get even more so. “The demand patterns have changed – it’s almost back to when they were normal,” said Ved. “Sure, during Ramadan, there was the spike in volumes. But post-Ramadan, it’s back to slower growth. With end-of-season promotions, there will again be a spike. What’s gone are the month-on-month gains retailers had seen in 2020.”
According to market feedback, some of the recent high-profile promotions from leading online marketplaces did not generate the same level of response. It could also be that with a steady diet of discounts happening at some shopping site or the other, UAE’s shoppers too are seeing a sameness about what’s on offer.
6thstreet is part of the multi-billion dollar Apparel Group, the home of Calvin Klein and Tommy Hilfiger in the Gulf markets, as well for Birkenstock and more. In fact, there are more than 75 brands forming the Group’s portfolio, all with optimum presence in the UAE and Gulf shopping destinations.
Even with that shared legacy, Ved says there are points of difference, including in the approach.
“As Apparel Group we have 75 brands - as 6thstreet we have 500 and will add 500 more,” he said. “The conversation is not about whether we are an extension of Apparel or not. The conversation is what does the customer want. If the customer says he wants to see us offer Nike or Adidas, we have to bring those brands on board. We don’t wait for Apparel to bring them in. we only rely on what the customer wants. It’s quite simple.”
But there is one area that 6thstreet shares with Apparel – the loyalty programme ‘Club Apparel’. Would 6thstreet consider launching one of its own?
“That will not be the right way to look at it,” said Ved. “The right way would be is there should be a loyalty programme that can give customers a programme helping them to shop better and faster. And one that be personalized too? Club Apparel does that already.
“Can we build one ourselves? We can… but it will take years. Our focus and forte is on selling. It’s much better to partner a loyalty programme that can help us with better personalization for customers rather than recreate that programme."
Egypt a ‘maybe’, but India is a ‘no’
6thstreet by now has got all of the Gulf markets covered – “While we believe we need to be focussed on what we do and where we are at, we keep an eye on where we need to eneter in the coming phase,” said Ved. “A market like Egypt is interesting despite the competition. There is still an opportunity to do more. It’s something to look at in coming days.
“But India - for sure, the online space is crowded already. Unless there is something we can do quite differently, we do not see moving in that direction.”
Plus, there is still much that can be done in the UAE and the Gulf online space. “While growth rates have slowed, there are more new customers coming online,” said Ved. “We have a mix of base of customers that keeps coming back to shop with us. We constantly recruit new customers. It’s always good to have that mix.”
And to keep selling at the right price…