With Amazon now in the UAE, what does it mean for local retailers?

Amazon and its Prime membership offering are now officially in the UAE.

With them come the expectations of a superior shopping experience, free deliveries, and other value-added services, cementing progress and industry maturity in regional e-commerce.

The industry has not been immune to the development of e-commerce into traditional channels. Global online retailers such as Alibaba (and Amazon itself), along with regional businesses such as Noon and Souq.com have been showing success in the market for quite a while.

Local brick and mortar stores have also been capitalising on digital sales: electronics and general retailers have built inroads by moving their offerings online.

However, a successful online retail presence requires a dedicated strategic framework and excellence in execution – it is not simply a matter of taking inventory online and implementing a digital payment system.

Making the shift to e-commerce requires a clear strategy, detailed operational planning, quality in execution and special attention to customer service. The goal is the development of deeper relationships with customers to support and communicate the offering.

Regional retailers now face Amazon, a competitor known for its ability to offer any brand from any country, a brand that has demonstrated a capacity to expand quickly and aggressively into any new competitive service offering.

Read: Souq relaunches as Amazon.ae in the UAE

While each company has its own strategic differentiators and approach to compete in a more dynamic marketplace, we offer a couple of ways forward — better when executed in parallel.

1. Re-evaluate product and service offerings

Traditional retail brands could look at trimming their product offerings into becoming curators of products rather than mass retailers, providing differentiated specificity and selection over a one-size-fits-all approach.

They could also look to leverage their local knowledge and business relationships to break ground into other value-added services and supplement product sales. Needless to say, this comes with the need to be accompanied by a new look at operations, management, and cultural shifts to ensure that the end-to-end experience truly delights customers with a focus on knowledge, quality and responsiveness.

2. Build and leverage emotional bonds with customers by creating, maintaining and executing a strong brand

Our modern understanding of consumer behaviour has changed dramatically, with a key learning being that emotion plays a critical role in decision making. Our decision making process is not sequential, but is instead influenced heavily by emotion: we build bonds with the brands we use and love. Every touchpoint we have with one of these retail brands, and every subsequent interaction thereafter, slowly builds associations and emotional connections, forming bonds that if managed carefully, could change the nature and the strength of the relationship between the two.

While retailers’ long term presence in the market has shown some successes, Amazon’s trajectory shows a strong ability to build stronger emotional bonds with its customers. Their focus as a business has spent decades creating and fostering these relationships: MBLM’s 2019 Brand Intimacy Report has seen Amazon rise to the first in the retail category in the UAE, showing a year-on-year strengthening of its emotional bonds with consumers.

As retail becomes primarily price- and convenience-driven, businesses will see a clear need to streamline and rationalise their offerings, developing world-class services.

But to supplement this and emphasise the offering in a foundational expression of what their companies stand for, they will also need to focus on strengthening their brands, building and maintaining strong emotional bonds with consumers in order to create long-term financial success and price resiliency.

William Shintani is the managing partner of MBLM