Jul, 2020 | By Sandeep Ganediwalla, Soumya Jain and Tanmay Parasramka
Retail-Tech – The next start-up opportunity
~30-50% of the customers increased their online purchase for the essential categories. This behavior is not just a one-time trend, a significant portion of these online migrants will stick to the current online behavior.
Managing Partner, MEA
The onset of the pandemic and the ensuing lockdown left no industry, institution and individual untouched. The retail sector had to adapt to the 'new normal'. The adoption of consumers to online channels has created a myriad of opportunities for retailers – both big & small.
Prior to the onset of the pandemic, we conducted a deep-dive into the opportunities for technological innovations in retail in the form of the report 'Retail Technology – The Next Frontier'.
But in light of the new situation, we, in partnership with Annex Investments, have re-looked at the opportunities – primarily in the enabler space to help entrepreneurs meet the challenges of the sector.
With this is mind, we are happy to present our new revamped report 'Retail-Tech Enablers– The next start-up opportunity'.
The report speaks about –
- Outlook of MENA E-commerce
- Challenges & Gaps in retail
- Key Opportunity Areas
The highlights of the report are –
1. The adoption of online channels for day-to-day essentials, will improve the digital maturity of the customers.
The COVID-19-induced lockdown has pushed a lot of shoppers online and has emerged as a major catalyst for E-tail in the region. This is reflected in the ~15-25% increase in online shoppers in the first few weeks of lockdown. ~30-50% of the customers increased their online purchase for the essential categories. This behavior is not just a one-time trend, a significant portion of these online migrants will stick to the current online behavior.
2. Retailers and customers face multiple problems along the value chain; COVID-19 situation has made a few of them more important than ever.
The retail industry is fraught with challenges along the value chain
- Sourcing & warehousing inefficiencies – High capital outlay, labor costs and inventory damage costs making warehousing inaccessible for smaller players
- Cash on delivery preference leading to operational inefficiencies – Cash handling charges, working capital blockage, failed deliveries are some of the problems COD brings into operations. Lack of credit options also hinders growth of AOV
- Unique last mile delivery challenges – From the cost side, high number of returns and fixed costs boosts expenses. From the manpower side, personnel cannot be hired on a demand basis. Additionally, last mile networks are usually not streamlined with mechanisms such as cluster division
However, the industry reaction so far has been in the form of temporary partnerships. The primary problem of meeting the needs of the new-age digital consumer remains unaddressed.
3. The biggest opportunity is providing enablers as a service to retailers.
We have outlined three types of enabler opportunities – those opportunities affecting the functioning of the sector –
- Fintech Services – B2B Credit, Next-gen insurance, Customer credit
- Logistics Services – Warehouse as a service, Delivery as a service
- Customer experience services – Developing that human-interface online for customers through use of Conversational Commerce
For details, do read our report. We hope that this report is food for thought for budding entrepreneurs on the numerous opportunities available in the retail sector.
If you have any questions, reach out to us at firstname.lastname@example.org