- September 28, 2021
- Posted by: Nivea Sapra
- Category: eCommerce Industry, Integration, Inventory Management, Marketplaces, Multichannel Retailing, Order Fulfillment
The e-commerce industry is booming in the United Arab Emirates. While the growing young tech-savvy cohorts of the UAE could be one of the reasons for this transformation, the overall market design has evolved to incorporate the existence of digitalization. Right from the growing consumption of e-commerce marketplaces to merchants from across borders coming to claim their digital property, the whole market scenario in the UAE seem s to take a shift with e-commerce coming into play.
From establishing multiple touchpoints across channels to retaining loyal customers to evolving marketing strategies, you have a lot of opportunities lying at your fingertips.
Are you a budding entrepreneur thinking about starting an e-commerce business in the UAE?
Or maybe you have an established brick and mortar but you are finding issues to synchronize your orders and inventory?
Or maybe you do have a great online presence but your operational costs are hampering your ability to grow your bottom line?
Well, the answer is to integrate your order, inventory, and logistics in such a way that you not only fasten up the inventory turnaround but also synchronize your efforts.
But before that let’s first focus on the current market opportunities and understand the untapped potential for e-commerce businesses in the market!
1. Growing Opportunities for E-commerce Players in the UAE
In the current scenario, the GCC region includes the largest e-commerce penetration rates globally. Not only do the consumers are highly dependent on the upcoming technology systems, but businesses are also leveraging them to build their retail capabilities. According to e-commerce in MENA, Opportunity beyond the hype, a 2019 report by the Bain & Company, the penetration rate of the UAE is 4.2%, which is similar to that of Turkey & Brazil.
Coming over to the marketplace platforms in the region. Now that’s something you as a seller can’t afford to miss. With a revenue of US$338 million in 2020, amazon.ae has become the biggest player in the UAE market, followed by namshi.com – US$144 million revenue & noon.com – US$128 million revenue. While Amazon has been the greatest e-commerce platform in the area, there are still others that you can definitely leverage, especially if you are a startup and are looking for niche consumers.
As we talk about e-commerce, it would be wrong to leave the logistics as achieving operational excellence is the goal of each e-commerce business. While enhancing the logistics and supply chain management capabilities could be the main focus of the businesses in the region, the new and improved technological methods, such as GPS-driven solutions, RFID tracking, and 3D printing, could be leveraged to support growth and scale business. Moreover, the emergence of shipping providers has empowered SMEs.
Now, the question is how can you actually make the most of these lying opportunities?
Well, it’s understandable that working in sync and optimizing operations has to be the top priority, but what are the actual challenges that work as a roadblock in your e-commerce journey, especially when you are operating in the UAE? Have you ever thought about that? Let’s understand!
2. Understanding E-commerce Challenges for Growing Online Retailers in the UAE
Challenges associated with Order, Inventory & Logistics –
We have seen that e-commerce is growing at an explosive pace in the United Arab Emirates, and people are shifting to online channels, but there are still some challenges that e-commerce businesses face even today. But, first of all, you need to understand that inventory, order, and logistics are correlated to each other. Even if you have mastered any one of these, you won’t be able to amplify business profits because the process will remain incomplete.
Imagine this; You have adopted an automated e-commerce inventory management system to get more control & visibility over your inventory. But you are still not able to fulfill orders on time. What could be the reasons?
Maybe your outbound workflow is not strong enough?
Or maybe you are not able to assign your orders to shipping providers efficiently?
Manual errors could be one of the common problems that companies witness without proper implementation of inventory, order, and logistics systems.
Some of the challenges that you are bound to encounter without a proper inventory, order, and logistics system are:
1. Inventory Management
The businesses in the UAE are witnessing e-commerce inventory management challenges such as, keeping the real-time inventory count and maintaining the fast stock replenishment. One of the main reasons for the inventory challenges is the obsolete and poor infrastructure of warehouses that are not competent to house the inventory in a systematic way. Moreover, the value chains are complicated in nature and also hinder the growth of e-commerce businesses. Some of the main inventory management problems that people in the UAE face are:
- Unable to keep up with the real-time inventory count
- Hard to maintain the fast stock replenishment
- Difficulty in locating the inventory in the warehouse due to limited visibility
- Problems in consolidation & sorting of inventory due to obsolete warehouse infrastructure
- Witnessing the situations of stockouts amid peak season
- Difficulty in managing the marketplace orders due to poor sync between inventory and online orders
2. Multichannel Order Management
One of the biggest problems in the UAE region is that bulk orders are difficult to route and fulfill. For example; you deal in the online business of fragrances and home aromas. Amid Eid al-Fitr, you come across bulk orders of Oudh. But due to the poor logistics capabilities, you are not able to fulfill them. In the order management process, this kind of problem is generally faced by businesses. Moreover, handling order returns is yet another issue that e-commerce brands face. Right from assigning the delivery partner for the returns, to hastening the overall process, there are a lot of aspects in reverse logistics that businesses need to gain control of. Some of the main order management challenges that people in the UAE face are:
- Hard to pick & pack optimization of SKUs at the order level
- Difficulty in fulfilling orders faster amid the seasonal demands
- Controlling the quality of the products to avoid delivery of damaged products
- Challenges in aligning the returns management process
3. Logistics Management
The countries in the UAE have the biggest disadvantage of postal codes over any other country. Many countries in the region don’t have postal codes or mail courier systems, which in turn creates a cluster in the minds of the businesses as to what orders need to be delivered in which region. For example, in Dubai, there are no street addresses for retailers to deliver the products, which makes it difficult for them to fulfill the demands of their customers on time. Moreover, e-tailers face difficulties in picking up products from SMEs as they are not much aware of e-commerce and are aligned to rather sell products to physical retail stores. Some of the main logistics management challenges that people in the UAE face are:
- Difficulty in tracking the order from the fulfillment center to the final destination
- Delay in delivering products due to the lack of postal codes
- Hard to assign deliveries to various shipping providers on the basis of the nature of the order
- Inability to integrate various fulfillment centers & warehouses due to lack of full-stack supply chain solution
3. How can you Overcome the Challenges in the UAE? Curated E-commerce Management Solutions to Overcome these Problems
In the digital age of technology, it has become increasingly important for you to opt for a technology that can manage and handle your operations with utmost ease. Right from maintaining the track of the inventory to automating the order updates to integrating with the leading logistics players, you can perform an array of tasks.
Let’s hop on and understand the processes and steps to solve the operational challenges in order, inventory and logistics management.
1. Inventory Management
Be it centralizing inventory to analyze the inventory levels and stockouts, or updating the inventory from offline, online, and warehouse in real-time, a centralized Inventory Management System – like Unicommerce – will empower you to understand the depth of multichannel and omnichannel retail. Moreover, with inventory management software you will be able to:
- Assess and update on virtual, and actual stock across multiple sales channels in real-time
- Integrate offline and online inventory seamlessly that eventually gives omnichannel experience to customers
- Monitor stock movements in order to build a steady stock pipeline and disbursement across all the sales platforms
- Synchronize stock automatically in order to ensure accurate stock visibility that eventually improves sales and controls order cancellations
- Rotate stock to address multichannel challenges, such as loss of freshness in the stock, old stock, damage, holding the cost of dead or unmoving stock
2. Order Management
An intelligently deployed multichannel sales tactic doubles up the sales volume with the addition of an order management system. The order fulfillment software enables quick order processing even during the situations – products of mixed prices, and varied nature of orders (fragile/inflammable/expensive).
If you are planning to employ a multichannel order management system, you should opt for a solution like Unicommerce, which ensures a 100% fulfillment rate!
Following are the features that a scalable order management system enables:
- Handle bulk orders; right from the order creation in various internal systems and marketplaces to invoice and label printing and shipping arrangement
- Handle unified orders across all the sales channels to process orders faster while saving your time and resources so that you can focus on your business expansion
- Ensure brand loyalty and grow repeat customers base across multiple touchpoints
- Reduce time in the processing of orders, thereby hastening the reverse logistics process
Apart from that, you should also utilize services such as multi-fulfillment centers (MFC) that are designed and curated to cater to the needs of your customers!
3. Logistics Management
Being one of the crucial tasks in the process of operations management, logistics not only helps you fulfill orders faster, but you can also enhance the customers’ experience with improved delivery services. To manage logistics in the UAE, you need the following listed logistics management solutions:
- Outsource experienced logistics professionals to ensure fast and efficient delivery of orders
- Employ local delivery agents who are familiar with the city’s nooks & crannies so that they can deliver seamlessly in the absence of postal codes
- Leverage marketplace platforms such as noon.com, which have invented a geotagging system that captures the location of the customer automatically
- Join hands with full-stack eCommerce enablement platforms like Unicommerce as they provide logistics integrations with world-class last-mile delivery platforms in the UAE, including Aramex, Fetchr, DHL Global, ClickPost, FedEx, Shipsy, among many others
While the e-commerce industry in the UAE is on the brink of a massive shift due to the changing consumer preferences, it’s imperative for you as a seller to understand the upcoming challenges & their solutions. Why? Because your operations are the fundamental of your business, and if you brace yourself against all the challenges then you will surely be able to accelerate your business growth, and who ain’t looking for that?