The last-mile delivery market in the GCC is gaining momentum, says a new study commissioned by Gulf Pinnacle Logistics
Why is the e-commerce sector a growing issue in the region?
The study has found that even though the Gulf has a high internet penetration, one of the largest mobile penetrations globally and a relatively high GDP per capita, e-commerce still hasn’t reached anything like its potential. The opportunity, according the Gulf Cooperation Council (GCC), is built on the fact the market will reach $23.7bn by 2022 – with annual growth rates of 7.2 percent.
What are the levels now?
In the US and UK, two of the most developed e-commerce markets, online shopping accounts for between 10-20 percent of all retail activity.
In India and Russia, it’s around five percent. In the UAE, however, it is still less than two percent. That equates to just AED500 per consumer per year.
Why is still so small?
There are two, possibly three factors: Firstly, there has been a general lack of quality e-commerce providers, although more have emerged in the last two or three years. Then there’s the lack of trust or knowledge of e-commerce in the high purchasing power segment of the Gulf’s population – while delivery convenience isn’t quite there yet, either.
What do consumers want from e-commerce, then?
In both UAE and KSA, consumers look for cheaper goods, but in the UAE consumers place a high value on fast delivery – almost 80 percent of consumers in UAE and KSA would be willing to pay for same day/express delivery, says Shailesh Dash, chairman of Gulf Pinnacle Logistics. “Late or long delivery times are the most common complaints,” he says. “We understand the challenges faced by consumers that come along with every delivery.”
What can lead the shift?
Flexibility. There is now a global race on for who can deliver shipments faster and more conveniently. Globally, the pace of delivery has evolved from a three-day window, to one-day, to same-day to a few-hours.
What are the rewards for companies who can offer this?
The global last-mile delivery market is expected to almost double in size to $3.4bn by 2022. The better the delivery solution, the greater the e-commerce penetration.