JEDDAH: The global boom in electronic commerce, further boosted due to the coronavirus disease (COVID-19) pandemic, has resulted in a dramatic increase in the number of parcels delivered each day.
Customer expectations for speedy fulfillment have also been rising, leaving companies to grapple with multiple, last-mile delivery challenges.
Last-mile delivery is the most expensive and time-consuming part of the shipping process and most e-commerce retailers in Saudi Arabia struggle with it. Delays, reduced success rate, and difficulty handling cash on delivery (COD), are among the many obstacles faced by the sector.
However, one Jeddah-based startup claims to have solutions to the problem.
Saee is a Saudi tech-logistical, last-mile delivery company aiming to introduce a new concept into the local market.
The startup helps to facilitate higher success rates and improve profit margins for companies and individuals, while alleviating the need for costly overheads such as cars and couriers.
“The most important things that retail, e-commerce clients expect from last-mile shipping companies is a high success rate, and rapid refunds,” Saee co-founder Tariq Alturkestani told Arab News.
Saee was founded with the support of King Abdullah University of Science and Technology (KAUST) to be the local solution for Saudi e-commerce platforms. It offers specialized services designed to meet retailers’ needs, such as guaranteed fast COD consolidation, and the facilitation of smart, flexible dispatch to freelancers, active customer service, and warehouse management.
COD services are being adopted by online retail companies to gain customers’ trust and to encourage them to try new products. However, they have high associated costs, which drives up costs in a country where around 95 percent of packages are sent via this service.
“I believe that e-commerce has a big dilemma called cash on delivery,” Saee co-founder Eihab Nassier told Arab News. “The end-user or the buyer is not obligated to take whatever they picked from the internet.
“Accordingly, the success rate for the shipments is 70 percent; since only seven out of 10 shipments get received by clients; meaning that e-commerce retailers are enduring about 30 percent of the cost with no actual revenue.”
The other side of the COD problem is slow cash flow, especially for small- and medium-sized enterprises (SMEs).
“As an e-commerce platform, the cycle means that I should send the shipment and get it delivered and then collect the money, transfer it, and then deposit it into my account which takes anywhere from 10 to 20 days. So, we’re talking about a cash gap of 20 days in the best-case scenario. But it often reaches three months,” said Nassier.
One of the solutions that Saee is offering for the problem is the concept of cash before delivery (CBD). “We give the clients the cash before the shipment is delivered with a very small percentage just to endure the cost,” he added.
“We do a transfer every week for our clients, and we have dedicated teams as well as an in-house developed technology to give our clients updated reports constantly.”
Saee delivers last-mile shipments in more than 120 cities and towns using 13 dispatch centers throughout the Kingdom and is working on expanding its reach further. “By the end of this year, we hope to be covering the entire Kingdom,” said Alturkestani.
Another factor that distinguishes Saee from other companies in the field is its reliance on a fleet of freelancers, which means it only recruits couriers according to demand.
“On average we dispatch around 5,000 shipments per day around the Kingdom, during peak seasons such as last Ramadan. In that time period, we dispatched around 12,000 shipments per day with a success rate of around 80 to 85 percent of the received packages,” he added.
During the COVID-19 lockdown, shipment companies scrambled to meet increased demand for residential deliveries, particularly with the many imposed controls and safety protocols. However, Alturkestani said that given the easy scalability of their business model, they were able to fulfill dispatch times.
“During the Black Friday season, we hope that we will be able to reach 15,000 delivery shipments per day,” he added.
According to Alturkestani, the firm’s elastic model and having one of the highest delivery success rates in Saudi Arabia has made major e-commerce companies prefer Saee over other leading courier companies in the Kingdom.
The company’s business model has allowed Saee to avoid having to pay for couriers, gasoline, and vehicle insurance, as well as being able to dodge the worst effects of off-season financial slumps. At the same time, it offers clients more efficient solutions to match their needs and provides local people with the opportunity to increase their income.
Saee’s fleet of freelancers guarantee clients a better performance; agents are not obliged to work within a specific timeframe and deliver a certain amount of shipments per day, so they are less pressured and have the time to focus.
“The average amount of shipments with other companies goes from 50 to maybe 90 or even 100 where our agents deliver around 20 (shipments),” said Nassier.
The KAUST partnership with the Saudi Human Resources Development Fund (HRDF) in the 9\10th accelerator program allowed Nassier and Alturkestani to meet and start their collaboration in 2016.
The company first began to reduce the unemployment rate for females in Saudi Arabia by carpooling women to work and was subsidized by the government program Wusool. However, after a royal decree allowed women to drive, Saee gradually pivoted its model and moved to dispatch of e-commerce packages.
Saee began working with big companies in Saudi Arabia and after raising its profile began targeting smaller companies with services that matched their demand.
“We just started two service products for small enterprises, even those who have one shipment per month only. We wanted to give them more options and to create an impact,” Nassier said.
He believes that the company has great potential to make a difference and bring a solution for the COD market in Saudi Arabia. “Who knows, maybe for the world after that? We want to be the number one company for e-commerce shipping in five years.”