How the coronavirus pandemic is reshaping GCC e-commerce

How the coronavirus pandemic is reshaping GCC e-commerce
Motorbikes belonging to a delivery company are picture lined up in Dubai, in the United Arab Emirates, on April 16, 2020. (AFP/File Photo)
Short Url
Updated 12 August 2020

How the coronavirus pandemic is reshaping GCC e-commerce

How the coronavirus pandemic is reshaping GCC e-commerce
  • More than 90 percent of consumers in the UAE and Saudi Arabia have shifted their purchases online, survey shows
  • Retail outlets are under pressure to expand their online presence — and e-commerce players to step up their game

DUBAI: The e-commerce industry in the Middle East and North Africa (MENA) region is witnessing a major transformation in consumer behavior on account of the coronavirus disease (COVID-19) pandemic, studies suggest.

The closure of shopping malls and stores as part of lockdowns imposed to curb the spread of the virus since March — restrictions that are now slowly being lifted to varying degrees across the region — has compelled a large segment of the consumer population to shop online.

This shift in consumer behavior is most particularly visible in Gulf Cooperation Council (GCC) countries, according to research by Ernst & Young (EY). A survey conducted in the first week of May found that 92 percent of consumers in the UAE and Saudi Arabia had changed their shopping habits, with 52 percent terming the change “significant.”

Another 58 percent of consumers said they were uncomfortable going to a mall, while 33 percent said they were uncomfortable going to a grocery store.

Ravi Kapoor, who leads Advisory for Consumer Products and Retail in the MENA region for EY, told Arab News that the reluctance to shop physically indicates that many customers are turning to e-commerce for their purchasing needs.

The restrictions on movement and closing of public spaces also drastically reduced footfall for many brick-and-mortar retailers, according to Kapoor.




A foreign laborer rides a bicylce past the warehouse of US package delivery firm UPS in the Gulf emirate of Dubai. (AFP/File Photo)

“For those without a supporting online presence, it meant sales and revenue came to a standstill during these periods or were significantly affected,” Kapoor said, adding that online shopping was likely to continue during traditionally busy periods, despite the easing of restrictions.

Hani Weiss, chief executive officer of Majid Al-Futtaim Retail, describes the region’s rise in e-commerce during the pandemic as “exponential.” For example, he said, online grocery orders on Carrefour’s platform in Saudi Arabia have seen an 800 percent jump.

Weiss says the pandemic crisis has “changed the e-commerce landscape.”

Depending on how prepared online retailers were to meet the new demand, the pandemic — the first in over five decades — is either a windfall or a setback.

Businesses without existing e-commerce capabilities, or the means to develop and activate their online presence, bore the brunt of the region’s rapid shift to online shopping, while retailers who met the challenge effectively, and in time, were able to “weather the storm successfully”, said Weiss.

Majid Al-Futtaim Retail accelerated the launch of their marketplace online platform and expanded their network of fulfilment centers and dark stores (retail outlets that cater exclusively for the online market), as well as their last-mile delivery capacity with new transport partnerships to meet increased online orders.




The e-commerce industry in the Middle East and North Africa (MENA) region is witnessing a major transformation in consumer behavior. (Shutterstock)

“We have witnessed a 400 percent growth in the number of orders placed (in the retail sector) and a 300 percent growth in online sales between March-May 2020 versus (the same period in) 2019,” said Weiss.

For Carrefour, a hypermarket chain that operates in 38 countries across the Middle East, Africa, and Asia, it was crucial to adapt to customers’ changing needs.

“We are now using advanced analytics to monitor stock levels and identify categories where additional stock is required,” Weiss said, adding that online shopping accounted for a large proportion of total sales during the pandemic, resulting in an expansion in user base and growth in “basket size per order.”




The pandemic is not only pushing traditional retail outlets to expand their online presence, it is re-energizing dominant online platforms to step up the supply of in-demand essential products. (Shutterstock)

The pandemic is not only pushing traditional retail outlets to expand their online presence, it is re-energizing dominant online platforms to step up the supply of in-demand essential products.

Amazon is one example of how a leading player is rising to the challenge.

“Our job is to focus on serving customers who need important products, ensuring that our employees remain safe, and supporting our communities. This crisis is much bigger than any one company,” Ronaldo Mouchawar, vice president of Amazon MENA and co-founder of SOUQ.com, told Arab News.




As consumers adjusted to a new way of living, e-retailers across the region initially witnessed “erratic” purchasing of essential items. (Shutterstock)

Similarly, Dubai-based property developer Emaar has set-up a simulated Dubai Mall on the e-commerce platform noon.com for customers to shop virtually at many of the center’s well-known stores.

As consumers adjusted to a new way of living, e-retailers across the region initially witnessed “erratic” purchasing of essential items. On the Amazon Middle East website, the first few weeks of the pandemic brought a sharp increase in the demand for groceries, personal care items and medical supplies, said Mouchawar.

Sales of multi-purpose home cleaning products increased by 490 percent, liquid soap by 1,000 percent, packaged foods by 380 percent and electronics by over 220 percent, said Weiss.




A moped is driven past the FedEx US parcel delivery firm's regional hub at Dubai airport. (AFP/File Photo)

Gym equipment saw a 600 percent increase in sales, as people sought to pursue fitness at home.

Sprii.com, an online marketplace for mothers and children, witnessed a rise in shoppers looking for essentials, as well as toys and homeschooling activities. Sarah Jones, the company’s founder and CEO, believes that with the digital marketplace becoming a bigger player, customers are also becoming more “savvy”, looking for the best deals and quality products.

The overnight shift in consumer behavior has also set off the trend of bulk buying, according to ITCAN, an e-commerce performance marketing company with operations in the UAE and Saudi Arabia.

FASTFACTS

THE NUMBERS

- 800% Carrefour in KSA has reported rise in online grocery orders.

- 92% UAE and KSA consumers notice change in shopping habits.

- 58% Consumers uncomfortable going to a shopping mall.

- 33% Consumers uncomfortable going to a grocery store.

“It is safe to assume that COVID-19 has irreversibly changed the way businesses function,” said Saudi entrepreneur Mansour Al-Thani, CEO and co-founder of ITCAN.

He believes the trend of online grocery shopping is here to stay.

This shift is forcing businesses to review their priorities and strategies to stay in the running. 




Ugandan Mullika Indy, an employee of CAFU, the first fuel delivery service in the region, service, refills a car using a mini tanker outside a client's house in Dubai, in the United Arab Emirates, on April 16, 2020. (AFP/File Photo)

“Liquidity and cash flow management are among the major challenges faced by the Middle East’s retail sector,” said Al-Thani.

“For e-commerce businesses, the challenges include maintaining delivery services and ensuring customer needs are fully met.”

Another challenge for e-commerce businesses, according to Fajer Al-Pachachi, ICT manager at Bahrain Economic Development Board, is whether global supply chain, transport and logistics can remain seamless if many ports, factories and airports stay closed around the world.




UPS officials at a news conference discussed the decision by the World Expo 2020 Dubai to use UPS to handle the logistics operations for the event. (AFP/File Photo)

“The connectivity of the GCC has mitigated this somewhat for the region,” Al-Pachachi said, noting that Bahrain has long served as the regional manufacturing and distribution hub for several global manufacturers.

“Bahrain enjoys unparalleled access to the GCC markets including its largest, Saudi Arabia, to which it is connected by the King Fahd causeway,” he said.

“While both countries were quick to work together to suspend passenger travel over the causeway, crucial transportation of commercial cargo and freight has been maintained.”

Al-Pachachi noted that in April, Bahrain launched the country’s first virtual mall, mall.bh.

“BenefitPay, one of Bahrain’s leading e-wallets, announced a 1,257 percent surge in transactions over the month of March alone. Customers can pay for both gas and donate to charity via e-wallets,” he said.

As elsewhere in the GCC bloc, Al-Pachachi said, in Bahrain too the pandemic has proved a “catalyst” for e-commerce.

--------------------

@jumana_khamis


UK medical tech firm reveals Saudi expansion plans

UK medical tech firm reveals Saudi expansion plans
Updated 34 min 33 sec ago

UK medical tech firm reveals Saudi expansion plans

UK medical tech firm reveals Saudi expansion plans
  • Nemaura Medical has developed a diabetes-tracking wearable device
  • Product launches are planned for Germany, the UAE, and Saudi Arabia

RIYADH: A British medical technology company behind an innovative diabetes monitoring system has identified Saudi Arabia as one of its key target markets.

Nemaura Medical has developed a wearables device which can help diabetics track their blood glucose levels, and the Kingdom is high on the firm’s international expansion plans list.

Its sugarBEAT continuous glucose monitoring (CGM) product was recently launched in the UK and is targeted at people suffering from conditions such as diabetes who want a needle-free alternative.

Initially the company recorded orders of 200,000 sugarBEAT sensors in the UK and has forecast total sales of 2.1 million this year.

Following positive feedback in the UK, it has announced plans to expand internationally and is lining up product launches in Germany, the UAE, and Saudi Arabia.

Dr. Faz Chowdhury, the chief executive officer of Nemaura Medical, said: “We believe our technology is ground-breaking and represents a paradigm shift in the way people with diabetes can manage their condition.

“We believe we have a critical first-mover advantage with a product that is easier to use, more flexible, and more cost-effective than existing technologies. We are not aware of any product of a similar nature in clinical studies or that has been submitted for regulatory approval.”

Nemaura Medical was founded in 2011 and recently expanded into the wearables market to develop and commercialize devices which can help to monitor chronic diseases and health conditions without the need for needles.

The CGM market is a growing sector and according to the Allied Market Research company will be worth around $9 billion by 2027.

The potential market for devices such as sugerBEAT in the Middle East and North Africa (MENA) region is considered strong with data from the International Diabetes Federation (IDF) showing more than 39 million 20 to 79-year-olds in the region having the condition in 2019. The figure is expected to increase to 108 million by 2045.

The IDF has estimated that in Saudi Arabia 15 percent of the adult population has diabetes.


UAE, Seychelles create travel corridor for vaccinated travelers

UAE, Seychelles create travel corridor for vaccinated travelers
Updated 13 May 2021

UAE, Seychelles create travel corridor for vaccinated travelers

UAE, Seychelles create travel corridor for vaccinated travelers

ABU DHABI: The UAE and the Seychelles said that vaccinated people can travel freely between the two countries following the mutual recognition of vaccine certificates issued by their respective authorities.
Quarantine-free travel between the two nations is possible from May 13 as they look to boost tourism in the wake of the COVID-19 pandemic.
Travelers must show they have received both doses of a COVID-19 vaccine through a valid certificate from the relevant health authority.


UAE and Saudi Arabia among biggest sources of remittances in 2020

UAE and Saudi Arabia among biggest sources of remittances in 2020
Updated 13 May 2021

UAE and Saudi Arabia among biggest sources of remittances in 2020

UAE and Saudi Arabia among biggest sources of remittances in 2020
  • Remittances from Saudi Arabia have been slowly declining since 2015 as oil prices have moderated

DUBAI: The UAE was the second largest source of remittances globally in 2020, followed by Saudi Arabia, according to the latest report from the World Bank.

The US was the biggest source country, sending $68 billion abroad last year, while the foreign workers in the UAE sent home $43 billion and those in Saudi Arabia transferred $35 billion, said the report, published Thursday. Among middle-income countries, immigrants to Russia were the biggest remitters, sending $17 billion.

Remittances from Saudi Arabia have been slowly declining since 2015 as oil prices have moderated and the government has encouraged hiring of nationals. For instance, foreign workers sent $1.8 billion to the Philippines in 2020, down 36 percent from 2015.

Despite the large drop in foreign workers in the GCC, remittances from Saudi Arabia held up in 2020 thanks in part to the cancelation of travel to Saudi Arabia, which diverted funds set aside for the Haj pilgrimage to remittances to Bangladesh and Pakistan, according to the report. Both of those countries offered tax incentives last year to boost remittances from migrant workers abroad, while a devastating flood in July 2020 also led to an increase in payments.

Remittances to the Middle East and North Africa rose by 2.3 percent to about $56 billion in 2020, following a 3.4 percent increase in 2019, the report said. The gains came amid unexpectedly strong inflows to Egypt (up 11 percent to a record $30 billion), the fifth-largest recipient of remittances globally, and to Morocco (6.5 percent to $7.4 billion). Tunisia saw a 2.5 percent increase, while other countries, including Lebanon, Iraq, Jordan, and West Bank and Gaza all experienced double-digit declines.

Globally, remittances to low- and middle-income countries fell 1.6 percent to $540 billion, a smaller decline than expected, the World Bank said. The figure is forecast to increase to $553 billion this year and to $565 billion in 2022.


Turkish lira falls to weakest level this year

Turkish lira falls to weakest level this year
Updated 13 May 2021

Turkish lira falls to weakest level this year

Turkish lira falls to weakest level this year
  • Turkish currency weakens on inflation data
  • Latest losses focus attention on forex reserves

BENGALURU:Turkey’s lira fell to a six-month low on Thursday as risks of tighter US monetary policy after strong inflation data weighed on most emerging market assets, with stocks set for their worst day since late March.
The lira fell around 0.8 percent to 8.4968 against the dollar, just a few points shy of its 8.5789 record low. The currency was likely subject to offshore selling on Thursday, given that Turkish markets were closed for a holiday.
Recent losses in the lira have brought the focus back to Turkey’s shrinking foreign exchange reserves, as well as its central bank, which is hesitant to tighten policy even as inflation surges.
Data on Wednesday showed US consumer prices increased the most in nearly 12 years in April, raising expectations that the US Federal Reserve will tighten its monetary policy sooner than signalled.
The MSCI’s index of emerging market currencies fell 0.2 percent, its third day of declines, as the dollar advanced and yields on 10-year Treasuries marked their biggest daily rise in two months.
The MSCI’s index of emerging market stocks plunged 1.3 percent to a seven-week low.
“With yields moving higher and inflation expectations becoming increasingly un-anchored from 2 percent, expectations grew that the Fed might have to start normalizing monetary policy earlier than previously expected,” said Marshall Gittler, Head of Investment Research at BDSwiss Holding.
“There’s going to be a real struggle for control of the narrative between the Fed and the market for the next few months,” added Gittler.
The Russian rouble strengthened on Thursday, up 0.2 percent, recovering some losses sustained on Wednesday. Bloomberg reported that the country was planning bond buybacks to fix its COVID-ravaged debt market. (https://bloom.bg/33BhvxY)
South Africa’s rand held steady as higher gold prices outweighed interest rate risks and a stronger dollar.
Most Central European currencies gained on Thursday with the Czech crown, Hungarian forint and Polish zloty gaining between 0.2 percent and 0.3 percent.
Still, JPMorgan reiterated its underweight position in Central and Eastern European local bonds and currencies, warning of “taper tantrum” risk as central banks tighten monetary policy.
Central bank bond purchase programs in Hungary and Poland — to support their economies through the coronavirus crisis — have been among the largest in emerging markets over the past year.
Asian currencies and stocks declined, while Taiwan stocks dropped 1.5 percent and the dollar eased 0.2 percent on fears of a COVID-19 resurgence and as the island started a rotational electricity blackout after a major outage at a coal plant.


Carlos Ghosn says he cut salary because of public opinion, court hears

Carlos Ghosn says he cut salary because of public opinion, court hears
Updated 13 May 2021

Carlos Ghosn says he cut salary because of public opinion, court hears

Carlos Ghosn says he cut salary because of public opinion, court hears
  • Ghosn’s testimony was presented as evidence by Kelly’s defense attorney

RIYADH: Carlos Ghosn told prosecutors during his detention in late 2018 that there was no legal obligation for Nissan to pay any deferred compensation that was voluntarily waived, according to statements read aloud in court during the trial of former director Greg Kelly, Asharq Business reported.
“The reason I cut my salary was because of public opinion, and to preserve the motivation of Nissan employees,” Ghosn told prosecutors at the time, according to testimony read by Kelly’s attorney in Tokyo District Court last Tuesday. Kelly has denied charges that he helped Ghosn not report his wages at more than 9 billion yen ($ 83 million), the news site said.
Actions against Kelly, 64, is about to enter its final stage. Kelly is due to stand in front of the podium, eight months after hearing testimonies from current and former carmaker executives, experts and other witnesses. Although Ghosn fled Japan from what he called an unfair legal system at the end of December 2019, his presence loomed large on the horizon during the trial, Asharq Business reported.
In comments translated into Japanese and then into English, Ghosn said: “As a businessman, I had hoped that Nissan, or through the alliance, would legally compensate me. People around me wanted to find ways to legally compensate me. They wanted me to stay in April.”
Ghosn’s testimony was presented as evidence by Kelly’s defense attorney, as well as by prosecutors, and Nissan, who was also accused of providing false information about Ghosn’s compensation. Despite the presence of Nissan’s defense attorney in court, the company has not actually appealed any dispute.
The arrest of Ghosn and Kelly in November 2018 caused a major uproar in companies and in the legal community, and its resonance continues to this day. Nissan has recorded low profits for a decade and has embarked on a cost-cutting plan to transform itself. The carmaker’s alliance with Renault SA and Mitsubishi Motors has also collapsed. The Americans, Michael and Peter Taylor, were extradited to Japan to face accusations of helping Ghosn flee the country, and the first hearing will take place next month.
Ghosn is now in Beirut, and he’s trying to restore his reputation. Besides conducting interviews, Ghosn has also launched a website, published a book, and is working on a documentary. Tuesday’s court testimony is a rare glimpse of what the former auto company’s CEO told prosecutors while in detention in Tokyo.
Ghosn, who was arrested twice in 2019, spent around 130 days in prison before being released for the last time in April of that year.
Ghosn told the prosecution office during his detention: “What I revealed was the amount I received, and if the deferred compensation was conditional, then this means that I understood that it is in a gray area. The reward will not be paid if the conditions are not met, and the amount should not be paid if it is not met. Disclose it. Compensation determined to be payable must be disclosed. “
Ghosn criticized the Japanese legal system, describing it as “a system of justice that violates basic principles of humanity.” The Japanese government described these allegations as unfounded, and accused the former CEO of spreading false information about the legal system in the country. The Justice Ministry also pledged to return Ghosn to Japan for trial, although this is unlikely, given that Japan does not have an extradition treaty with Lebanon.