From the Economic Ashes of Covid19 – E-commerce Rises!
As 2020 dawned, the world found itself staring into an enemy no one could see coming.
The Covid19 which quickly escalated from an outbreak to a global pandemic within a short period of 2 months caught most the world off-guard. As the pandemic continues to ravage the world, it has and will continue to reshape, not just the health infrastructure or business environments but also our very social fabric. The pandemic has actually altered how we see the global world which is currently being stretched and brought to a tipping point.
The economic fallout has been massive with global indexes like S&P, Dow Jones, Hang Seng tanked 30% by last week of March. Although some recovery has been witnessed due to extended relief packages announced by most Governments, the businesses are still left with no choice but to go back to their drawing board and carve out a new out of the box survival strategy. If businesses want to make it alive, they need to convert this challenge into an opportunity.
Digital Transformation is the need of the hour
CEO of Dalma Capital says the Covid19 is changing consumer behavior, driving demand and helping them solidify their portfolio of institutional level logistics and industrial real-estate across Jafza, DIP and Dubai South. From largely gloomy sentiments across the broader economy, companies like Dalma are growing their footprint aggressively with a view that market share of e-commerce sale will continue to grow as a proportion of overall retail spending in UAE, as consumer spending behavior continues to be catalyzed by Covid19 situation.
The habit of online shopping would have been already instilled in consumer behavior even after the situation normalizes. The firm has witnessed significant growth in e-commerce sales at $6bn to $8bn per year at the top line, which is leading to demand for 8 million to 10 million square feet of new industrial-grade logistics and warehouse real estate per year.
Technology yet again comes to our rescue – as it provides an alternative to physical interaction and gives the businesses the medium to reach out to millions and billions of audience through digital channels. While brick and mortar businesses were already giving up their turf to online competitors in the last few years, this unprecedented situation, with most countries under complete or partial lockdown has left no choice for conventional businesses to embrace the digital landscape and come on the front foot to fill this void.
Let’s look at some of the top-performing companies and Categories in eCommerce in the GCC and UAE:
Top Performing Companies in eCommerce in GCC:
1- Bin Dawood Holding
Saudi Arabia’s BinDawood Holding witnessed a whopping 200-per cent spike in its online sales since the escalation of COVID-19 in the kingdom; average sales on a 10-day basis grew up by 200 per cent and average order value grew by 50%; app installations topping 400 per cent.
2- Lulu Super Market
With demand for online sales stretching the retail space and related logistic infrastructure to its limits, LULU has expanded its delivery by engaging with 3rd party delivery companies.
3 – Bin Sina Pharmacy
Other Categories are catching up, like pharmacy business as authorities and health cares are encouraging reduction of hospital visits unless critical. Binsina Pharmacy has been an early mover in this space with setting up a Whatsapp ordering platform and also a pharmacist staffed call center. In addition to partnering with Instashop, they are working on their e-commerce website offering 9000 plus health and beauty products.
4- Majid Al Futtaim Carrefour
Majid Al Futtaim Retail, with the prized Carrefour franchise in the UAE, is currently facing a situation, shared by all retailers due to Covid19 pandemic – falling numbers of in-store customers and rapidly rising demand on e-commerce platforms. It has witnessed an online orders surge by a whopping 300 percent year-on-year as a result of UAE residents stocking up on supplies – ranging from food and hygiene products to freezers and printers.
5- Lulu Money
Another business that has aggressively ventured in the digital space is Remittances, with local banks supportive of this, the app and online channels are providing the needed relief to customers from the comfort of their palm devices. The recent restrictions on outdoor movement has led to increased activity on the ‘LuLu Money’ platform, especially in UAE, Kuwait and Bahrain with the app, which has over 350,000 downloads, saw 15,000 new ones in the last 10 days.
6- Dubai Mall
Emaar Malls has offered retailers at Dubai Mall a place at Noon.Com powered virtual store as well as at Namshi.com. The Dubai Mall that currently has over 1,300 stores is providing the needed alternate. The stores at The Dubai Mall will have to opt-in to sell on the virtual stores on Noon and Namshi and the two platforms will help retailers take the inventory and stores online. The move will offer free cashless delivery to all the users of these platforms in the United Arab Emirates. The same is expected to be followed by other malls in upcoming weeks.
With people stuck at home, delivery services of groceries, essentials and critical items and food – they are craving for, is their only solace. F&B online portals are continuing to attract customers with attractive offers and improving their delivery times. As lockdown becomes the new normal for a foreseeable future, the online bandwagon is here to stay.
With directives from Sheikh Maktoum, the schools and colleges moved to online digital space almost immediately. The enormous amount of backend work like equipping the schools, training the teachers and getting students adapted to new ways of working had a fast learning curve. However, it enabled this sector to retain its revenues while providing the needed solution to safeguard the critical education sector of the society.
The rapidly evolving situation has strong-armed the retailers to innovate and come out of their comfort zones by proving the consumers what they want.. In the short-term, the reality is that most retailers will be struggling to offset the losses at their brick-and-mortar locations, however it’s a time to capitalize on this opportunity to minimize these losses using digital channels and surviving the storm. The above case studies show the resilience that some businesses have shown and give inspiration to others to quickly embrace the change and bring themselves up to the learning curve.
Social distancing has proved to be an effective tool to flatten the infection curve. As People continue to be advised to abide by these rules, they have their normal lives turned upside down and have been left with no choice but to adapt to the new Normal, one that is heavily reliant on technology – Remote work, virtual meetings, online stores, and delivery apps.
That means e-commerce and digital space is people’s safest method of interacting with the outside world. So it’s no surprise that these companies have seen an intense spike in demand. What is crystal clear is that the World will be a very different place in 6 months time, with Digital being the new reality and firms who quickly adapt to their new norm, will be able not just to survive but to come out with a stronger infrastructure to service the change in consumer behavior. Unprecedented time challenges your limits and requires bold, innovative and collaborative initiatives. The world is witnessing a digital-revolution and rise of e-commerce phoenix from the economic ashes of Covid19.