India | ME | SEA Subscribe to Newsletter  Leadership Index 

Jun, 2020     

UAE’s online shopping struggles to cope with home, school and work

e-Tailers say that visitor traffic to their sites are up 60 per cent or more in recent weeks – but actual order “fulfilment” is running at less than half.


Dubai: Place an order online… and keep waiting. Deliveries are stretching into days and even up to a week as the surge in demand starts to overwhelm the supply capabilities of online marketplaces.

It’s not just on grocery purchases alone – not one product category is spared as UAE consumers take almost all of their buying onto online options. Even branded tech products are now facing delays, as home-based work and learning become standard practice for residents.

Until now, when it comes to tech gadgets, it was only the lower priced brands shipped in from China that was seeing shortages.

“It upsets customers when delivery cannot be confirmed within two days,” said Alex Tchablakian, Chief Operating Officer at LetsTango.com, which started two years ago as an online electronics retailer but has since added workout equipment and health supplements.

“These days, it is taking up to seven days to get clarifications from vendors on order confirmations alone. That’s not helping. The sentiment with online shoppers is that if they order something, they want it today.”

Home learning and remote working have had the maximum impact on gadgets and the demand for them. Either shoppers wanted to pick up a tablet/notebook or they wanted to go in for an upgraded product.

“With tablets, especially iPads, the demand in the initial days of home-based learning, the demand was just too great,” said Tchablakian. “And actual supply in the UAE market was stretched… which explains why delays happened.

“But on most branded tech products, we are seeing more supplies available – it’s not the situation as when restrictions on people’s movement were put in place.”

Stocks are limited… and prices higher

But market sources say that turnover is sky high on in-demand products that even with new supplies coming in – and more on the way – online retailers are still seeing frequent “out-of-stock” situations.

“This has led to premium [tech] products seeing price increases in March and April,” said Sandeep Ganediwalla, Partner at RedSeer Consulting. “Premium smartphones such as iPhone11, Samsung Galaxy Note 10 and Google Pixel 4 have seen spikes of Dh200-Dh400 in the last 15 days in Dubai – that’s equivalent to a 5-15 per cent spike on the price.

“Premium laptop and tablet brands such as Apple are up marginally. Another popular brand Microsoft Surface is having a “stock-out” of its lower-priced models on marketplaces such as Noon and Amazon, resulting in customers being forced to buy premium versions.”

Disappointed customers

It’s up to the online retailers to ensure that they manage to bring down delivery times. Some e-tailers say that visitor traffic to their sites are up 60 per cent or more in recent weeks – but actual order “fulfilment” is running at less than half. (Order fulfilment tracks the full journey from a prospective shopper arriving on a site, browsing through categories, and then placing orders. But if the marketplace cannot guarantee delivery within a stipulated period, it ends up as a lost sale.)

Divert the goods?

With all the stores remaining closed, can’t these brick-and-mortar retailers push their inventory onto online channels? Once those stocks too get added, then the issue of availability becomes less of an issue.

According to Vijay Samyani, Managing Director of Concept Brands Group, such conversations will be happening in earnest in the coming weeks. “Online shopping portals are the easiest way they can divert slightly old or off-season merchandise,” he said. “It can be done provided approvals are got from the brand principal or the franchisee.

“Retailers need to have such conversations with online portals because shoppers are not going to back en masse once malls re-open. Most shoppers will continue to buy online until they are fully reassured.

“In such a situation, brick-and-mortar retailers will have to use online to clear stocks.” (Samyani, who runs six to eight off-season sales events a year at Dubai World Trade Centre, plans to shift online for the upcoming end-of-Ramadan promotions.)

Even Dubai’s malls get into online swing

The cessation of commercial activity does not mean malls are biding their time until they can open again. The Dubai Mall, the most visited mall destination in the world, opened a “virtual store” on noon.com. Customers can shop for more than 20 leading brands and with new ones to be added later. “All stores and services within The Dubai Mall – including essential retailers such as supermarkets and pharmacies are encouraged to sign up,” the mall’s owner, Emaar, said in a statement.

Deliveries will be handled by noon.com, with next-day delivery on select orders.

Fewer ‘returns’

One outcome that UAE’s online retailers will welcome – apart from the higher sales volumes – is that fewer customers these days are making returns on goods they ordered.

In pre-COVID-19 times, such returns would represent more than 20 per cent on all goods delivered for leading online portals. What this meant is that it was hurting their profit margins, not to mention the longer time it took on each such order.

“True, there has been fewer returns,” said Tchablakian. “It used to be about 15 per cent of all orders for us. After all the effort on delivery, sanitized packages and the safety precautions drivers and delivery personnel have to take, having to deal with fewer returns is a respite.”

Casting a wide net

Meanwhile, UAE retailers are coming up with innovative ways to reach potential shoppers. In recent days, some of them have tied up with homeowner association management companies – with their sizable user base – to offer targeted sales promotions/discounts.

“Databases of potential shoppers count a lot these days – because the whole of shopping is now taking place within the confines of homes,” said Altaf Patel, Manager – Procurement at DubaiBazaar, an online retailer. The only way retailers can win is to reach out to those shoppers confined to their homes.

“Those retailers who do it best get to win the round… and future rounds.”

  • CATEGORIES

  • Recent Insights