Dubai: The Dubai-based online shopping portal 6thStreet is taking full control – of the last-mile. By year-end, the retailer will bring all of its delivery services in the UAE and other Gulf markets in-house, by which it hopes to bring in significant reduction in costs.
“Not just reduced costs, we will look at raising the customer experience higher,” said Dharmin Ved, CEO. “Because it’s at the delivery end that things could turn pretty sour with the consumer, with delayed or faulty handovers. By owning our last-mile services, we can control that experience.”
It was in the second-half of 2020 that 6thStreet – part of the Apparel Group’s retail empire – first started investing in its own fleet operations. The usual business model for ecommerce marketplaces is to use third-party fleet operators to do the door-to-door delivery and thus not have to pay the cost of the vehicles and have drivers directly on the workforce.
It meant that differing levels of customer experiences and that’s when Ved decided the retailer had to go in a different direction. “Only in Dubai because of the stiff competition in the fleet business, cost of delivery is relatively lower,” he said. “In other Gulf markets, we found that last-mile costs can be quite high. Plus, the experience was not up to the mark.”
Since mid-2020, 6thStreet has added vans in the “hundreds and towards the end of this year, we should be ready to do the delivery in all the markets we are in. I don’t want to go into the actual vehicle numbers – but we are getting to where we need to be.
“It was not only about adding vehicles and drivers – the software systems had to be just right to get the deliveries made to the intended address at the first opportunity. That’s where the customer experience comes in.”
Awaiting a settled supply chain
Taking control of the last-mile is one facet of the shipping and supply related issues ecommerce companies – and just about any business – has been facing since early 2020, when the pandemic breakout led to factory shutdowns and ports lying idle.
“We hope that the shipping business will get back to normal – yes, container rates are up way more than 30-35 per cent,” said Ved. “Sea-freight still makes up the bulk of how we bring goods from factories and suppliers all over the world. There is quite a bit we bring via air. In this business, bringing the product that customers want most in the quickest time far outweighs the cost of shipping it in.
“We have done well by not focussing only on the costs. We have been doubling the size of our sales every year – and expect the same this year too.”
"We are a team of about 500 and we should be looking at raising that by another 50%," said Dharmin Ved. "We have prepared the budgets, it's clear we need more people. But first, we will see how well the first Dubai store will do."
More than Apparel
6thStreet has developed into a standalone entity and not be seen as the retail arm of Apparel and the many fashion and accessory brands that it represents. (The Apparel universe straddles Tommy Hilfiger to the upscale Austin Reed, from Calvin Klein to Birkenstock.)
Now, 6thStreet is ready for a bit of its own physical space. It will open its first physical store, in Dubai, to be a sort of ‘experience destination’ for its online shoppers. (Ved, clearly, is big on experiences.)
“Even with customers knowing about our brand, we needed an extra layer of trust. That we thought will come from a physical place they could go to,” he said. “Look, let’s be clear – we are not creating another sales team. The experience centre will have ‘guides’ and ‘fashionistas’ to help a shopper out with any trending tip to dress up. We are not putting up a store to have another shoe sale or dress being bought. This is about helping with the look our shoppers will want.
“We will take all the lessons we can from the first store and possibly add a second one in short order. I do think going hybrid in the way we sell is the right way to go.”
Plus, double down on the experiences to offer - and deliver.