Internet penetration has contributed to a rapidly increasing growth in the middle-east e-commerce industry. Although the evolution was bit late compared to the other countries, the future is promising and retailers are slowly embracing the diversification in the business. However, these opportunities do bring challenges which range from consumer concerns over cyber security, electronic payment gateways, as well as the regulatory framework to improve the ease of doing business for online retailers. Apart from this, concerns related to logistic infrastructure cannot be underestimated, due to which e-commerce in the middle-east might not progress at desired rate. We would like to share some of the key logistical challenges faced by the industry in middle-eastern region and proposition on how to overcome them effectively.
- Warehousing Challenges – E-commerce players in the Middle-East face numerous challenges related to the warehouse operations – like maintaining real-time inventory, quicker replenishment, lack of technology standards and so on. To overcome these challenges; e-commerce companies need to get their warehouses redesigned, get the internal processes remapped as per modern requirement so that it leads to increase in efficiency of e-commerce supply chains.
- First Mile Pick-up Issues – It has been observed that major e-commerce retailers in middle-east confront challenges while picking up the products from small and medium businesses. General tendency with SMBs is to sell products at neighbourhood brick and mortar retail store rather than going online. Experts recommend mapping pickup centre locations close to where SMBs and other suppliers are – this would enable faster pickups and shorter order processing times.
- Last Mile Delivery Complexities – The most crucial juncture of e-commerce is last mile delivery since it’s the point where online transaction transforms into offline with hand-to-hand delivery. Same day delivery expectations demand a lot from e-commerce companies and due to infrastructure difficulties like the absence of street addresses and lack of penetration of courier services, delivery speeds get affected. To tackle this logistical challenge, e-commerce companies may opt for outsourcing this activity to experienced professionals in this field. Experts at Holisol recommend adopting network design with conveniently located fulfilment centre(s), real-time monitoring of order in transit, employing technology and so on.
- Returns’ Management – Research shows that customers return up to 30% orders made online over e-commerce sites. Growing expectations of replacement or refund of such orders is a challenge e-commerce companies need to tackle. It is advisable to lay emphasis on strengthening reverse logistics channels, keeping a scope for managing incoming inventory at the fulfilment centre(s)/warehouses, quicker replacements and so on are the key to handling returns for e-commerce players not only in middle-east but anywhere.
- Order Quantity Barriers – For e-commerce in middle-east, logistics industry comes across a unique challenge of catering to low order quantities like delivering only five packets. In addition to this, order numbers are also not that huge compared to traditional supply chain order quantities. Logistics experts suitably advise e-commerce players to utilise services of multi-fulfilment centres (MFC) which are strategically located and cater to multiple clients. Holisol has implemented similar MFC based solution for online retail giants in India.
- COD Orders – As per a study by PayPal in 2013, around 60 % of online purchases are made in cash in middle-east. Thus, e-commerce players come up with issues like the large gap between order and payment, return rates and chargebacks make it further complex. Overall, it complicates the delivery process. Creating secure payment gateway solutions and usage of rating points could well pave way for e-payments in middle-east e-commerce. Implementation of fraud monitoring tools by e-commerce companies can give customers the confidence to shop online. Having sound infrastructure in place will give a boost to alternative payment methods like payment wallets, mobile payments etc.
There is no running away from the very fact that e-commerce in middle-east is about to take a big leap. Bigger differences, however, lie in the uniqueness of middle-eastern countries in the adoption of such technologies. Thus, it is necessary that e-commerce players and online retailers adopt measures to tackle relevant challenges – logistics is one of those key issues. Experts at Holisol also conclude the same with similar experience having helped Indian e-commerce players overcome such barriers in the past by redesigning order processing techniques, warehousing methods, implementing technological solutions and so on.