E-commerce: How to prepare your business for success
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E-commerce strategies: How to prepare your business for success

E-commerce strategies: How to prepare your business for success

An overview of key areas that businesses should focus

Gulf Business

As the world moves further into a digital age, the Middle East market is poised for a second wave of e-commerce growth. Driven by a young, tech-savvy population and the impact of Covid-19, the region’s e-commerce sector has experienced an exponential increase in sales and user adoption, giving rise to a new generation of digital-native household brands, such as NowNow, Namshi, Eyewa and Squatwolf.

Elias Aad, partner and head of Digital and Entrepreneurship, Roland Berger

Growth is expected to continue at a double-digit rate, of around 20 per cent per year, bringing the total market value to $70bn by 2025. Advancements in technology, such as Web3 and artificial intelligence, are expected to further accelerate market growth, paving way for the next generation of e-commerce businesses.

To capture this opportunity, businesses must adopt agile and adaptable e-commerce strategies, navigating challenges of this ever-evolving landscape. Rising customer expectations, stricter data protection regulations, and intensifying competition are just a few examples of changes forcing businesses to rethink their online strategies. To thrive, businesses should develop tailored e-commerce strategies around a set of clearly defined core capabilities.

Here are some key areas that businesses can focus on to build a strong e-commerce strategy in the Middle East.

Omnichannel strategy

Emanuel Brendarou, project manager – Digital and Entrepreneurship, Roland Berger

To accelerate growth, regional businesses should consider adopting an omnichannel approach integrating online direct-to-consumer models, online marketplaces, and offline channels. Despite the seeming contradiction, offline still represents the lion’s share of the total market value in the Middle East. Offline presence – via own stores or wholesale partners – can offer attractive avenues of growth for digital-native businesses and unique advantages like personalised, face-to-face service and sales support, which can help complement and elevate online performance.

UAE-based brand Eyewa serves as an excellent example of an online business successfully growing through offline presence – founded in 2017 as an online platform, Eyewa has expanded with 60 stores in the GCC over the last two years. Channel decisions should be considered in the context of the underlying business model and strategy; an integrated omnichannel approach can create positive spill-over effects on online channels.

Leverage content to build a platform

The democratisation of media has led to the emergence of numerous content creators who have built influential platforms and solid personal brands, later monetised via various products and services. Notable examples include Kim Kardashian’s Skims and Huda Kattan’s Huda Beauty, showcasing the power of content-driven brand growth. With diminishing returns from online marketing channels and traditional influencer collaborations, it is imperative for consumer-oriented e-commerce businesses to find new ways of reaching their target audience. Content creation can serve as a powerful lever to build platform and reach, to mitigate rising customer-acquisition-costs online.

Establish a flexible logistics infrastructure

Alexander Steffan, principal digital marketplace, Roland Berger

Logistics and last-mile delivery remain critical challenges for e-commerce businesses in the Middle East. The underdeveloped infrastructure in the region hinders many companies from meeting customer expectations with regards to same-day and next-day deliveries. Cross-border shipping is further complicated by import costs, customs duties, and VAT, impacting order fulfillment and reverse logistics.

To overcome these hurdles, businesses must establish a reliable and adaptable logistics network tailored to regional requirements. Possible solutions include establishing a capillary fulfillment infrastructure via retail stores and / or brand partners to cater to customer expectations, whilst also employing measures to optimise operations. Decisions regarding logistics setup are closely connected to core strategic questions and should be guided by decisions regarding current and future focus markets.

E-commerce strategy: Conclusion

To build a successful e-commerce strategy, business need to navigate the challenges and capitalise on the opportunities presented by the region’s evolving landscape. From an omnichannel approach to content-centric strategies and flexible logistics infrastructure, there are several key areas and considerations that businesses must take into account when defining their e-commerce strategies. By focusing on select set of core capabilities and investing in the right areas, businesses can build a strong position in the e-commerce space and seize the opportunity for growth that is likely to be seen in regional markets in the next decade and beyond.

Read: Total e-commerce market value in MENA region to surpass $57bn by 2026

Also read: E-commerce: Local adaptation of global technology

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