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GCC or the Gulf Cooperation Council is an economic and political alliance of six middle‐eastern countries namely the UAE, Bahrain, Kuwait, Saudi Arabia, Qatar, and Oman. It is one of the fastest-growing regional eCommerce markets in the world. The market size of the eCommerce industry in the GCC was slated to reach USD 20 billion by 2020.
Considering the global pandemic situation and the resultant economic slowdown, these estimates will have to be revised. What is not likely to change much is the underlying eCommerce market potential in the GCC. Consumption and economic and business activities might be down for now but like anywhere else in the world it is a perfect time for eCommerce businesses to think of adaptability and expansion. So, what do eCommerce businesses with expansion plans to GCC / UAE do now?
In this article, we will highlight nine important considerations for eCommerce enterprises with aspirations to expand their business to the GCC/UAE market.
Solid Market Research
Market research is a basic and foremost requirement in planning business entry to any new market territory. Under the shadow of COVID pandemic and lockdown, market research has assumed unparalleled expertise. The on-going global crisis has already changed customer behaviour in terms of priorities and preferences pertaining to demand for products/services, channels of delivery, method of payment, safety and hygiene assurances, etc. Thus, a thorough and updated market research becomes crucial for assessing a new market. Old research and data will not accurately reveal the current priorities and preferences of the customers.
Things look good for eCommerce business in carrying out a market research study (either on its own or via any agency) now because people around the world are spending more time on the internet. Web, search engine and social media analytics can provide fresh, relevant, and ample data.
An important consideration for the GCC/UAE market is that the market research industry there is in its nascent stages.
Good market research should aim at achieving insights for:
- Demand for a product/service offering in a new territory
- Size of the total market and addressable market segment
- Customers’ tastes and preferences
- Level of competition
- Substitute products
- Industry trends and forecasts
Robust Inventory Management
Managing inventory systems for a region that comprises six countries can be a challenge. It calls for well-planned inventory management systems aided by Standard Operating Procedures (SOPs) for ensuring smooth flow of goods, cost optimization, and consistency in performance across the supply chain. But irrespective of the geographical territory, the fundamentals of establishing a robust inventory management system do not change. As the territory gets bigger, so must the system’s capabilities.
The need for robust inventory management becomes more pertinent for the GCC eCommerce market from a marketing perspective. Several international brands already have a strong presence there. The spending power of customers is well-recognized. Customers’ expectations remain high and strong. New eCommerce players need to keep themselves up to the prevalent standards of inventory management towards ensuring that customers’ needs and expectations in this regard remain consistently addressed.
Centralized Distribution Hub from free-trade Zones in Dubai
Free-Trade Zones are areas or regions where businesses (operating in those regions) are exempted from the major types of taxes applicable in a country like corporate taxes, custom duties, income taxes, Value Added Taxes, etc. under given conditions. This is done by various countries to promote trade, business, economic activity and foreign investment. In these zones, goods can be dropped, moved, manufactured, reconfigured and even re-exported without the intervention of the customs authorities.
Here, Dubai can prove to be a good choice as UAE is emerging to be the favourite eCommerce market hub of all the GCC countries. There are 24 free-trade zones in Dubai for specific sectors and industries. These free-trade zones offer an opportunity for foreign companies to set up regional manufacturing facilities or distribution bases with complete business ownership and full tax exemptions under necessary licensing and approvals.
Under a centralized distribution hub model, companies maintain a central warehousing and distribution facility to and from which the flow of inventory takes place. There are several benefits to this model. First of all, it makes the task of inventory management and distribution organized. Secondly, if done right, it can prove to be efficient as against maintaining multiple smaller distribution centres. Thirdly, better focus can be laid on service through SOPs, better manpower, and advanced equipment and technologies. Fourthly, better 3PL service providers can be attracted because of higher inventory volume and quality of service and operational infrastructure.
Outsourcing Inventory Fulfilment to 3PL Partner
Outsourcing inventory fulfilment to a 3PL partner involves hiring a third-party logistics management company to take care of your warehousing, picking, packing, shipping and returns processing. 3PL arrangements are useful in new geographies and new markets for a foreign company. It sheds off the burden of building and establishing inventory and logistics assets in a foreign land. And resultantly, companies spare their focus on other important areas like marketing, finance, customer support, IT applications, etc.
Dubai, being an eCommerce hub has no dearth of 3PL service providers. Varying from company to company, offered services may include cargo, warehousing, distribution network support, 24×7 support, etc. catering to businesses of all sizes.
Tying up with Courier Partners for last-mile Delivery
For the last mile delivery, established courier service agencies may be hired to pick up goods from warehouses and deliver it to the end customer at his doorstep. These service providers must be professional and carry a good reputation. In a foreign land, it is ideal to go with a strong brand name.
The last-mile delivery can make or break the brand equity of a company. For instance, Amazon took everyone by surprise by introducing “one-day delivery” assurance to its customers and they made it happen and it changed the perception of a lot of naysayers towards the company.
This is an ideal strategy in supply chain management in eCommerce suggested by many eCommerce business consultants in global eCommerce solutions. Delivery has become a key differentiating factor in the eCommerce business as more and more players are entering the game. Thus, you should make sure to have the fastest delivery possible and see if customers are ready to pay a premium for such concepts as same-day delivery guarantee.
Customer Support Team with Language Proficiency
Customer support is another highly important aspect in an eCommerce business as an important element of customer experience and customer journey. In almost every eCommerce platform customers can check anything online – products, delivery status, payment refund, etc. It is only in the event of something going out of the standard route that customers get in touch with the support team. These communications are usually one to one and take place via emails or phone calls. The customer support representatives need to be proficient with the local languages to handle these communications effectively. Doing so does not elevate customer experience but failing to do so will have a degrading effect.
Local agency for accounting, taxation & regulatory compliances and advisory
The law of the land must prevail. Foreign companies need to remain in compliance with all applicable laws and regulations. This is not just in Dubai but for any place of operation. These compliances could be in the areas of maintenance of accounting records as required, adherence to taxation rules, keeping the necessary business licenses and permissions updated, labour laws, etc.
Because it would be not possible for a foreign company to quickly learn and adapt to a new environment, authorized local agencies that provide helping services to businesses could be considered. Working with such agencies will significantly ease off the burden, help companies be on track, and avoid any unintentional violation of applicable laws.
The simple thing is that an eCommerce website or app should be built and designed keeping in mind its local users. Thus, content localization becomes important. Just as you were having a customer support team who is well versed with the local languages and dialect, you should also design your website or app in a similar way. Apart from the use of local language for writing website content, other aspects to be localized in an eCommerce website are display time, currency, customer support phone numbers, navigation buttons, cultural considerations etc. The website must also come across as familiar and friendly to the visitors for them to take an interest in it.
Digital Marketing with GCC Countries in Focus
Running a business in a foreign country is unfathomable without digital marketing especially in the UAE market which is fast-rising and emerging to be a global eCommerce hub. With a digital marketing strategy, foreign companies can spread awareness in remote market geography. Without any prior presence, digital marketing is the best way forward.
Digital marketing campaigns can be based on search engines and social media. It can also be in the form of blogs, videos, infographics, press releases, and email marketing. Here, the emphasis must be local with the target being global. A glocal strategy must be incorporated to attract more audience. This is even more pertinent in Dubai that already houses big global brands and is known to have customers with very high expectations both in terms of products and services.
One more important thing in digital marketing is to keep a tab on ROI (Return on Investment) from digital marketing campaigns. This is to ensure that investments in campaigns that are not yielding desired output are redirected to new or fruitful campaigns.
The GCC or UAE eCommerce market is undoubtedly attractive but can be severely competitive. These are wealthy nations, have all major global brands working at full-throttle, customers with very high expectations, business negotiations can be very tough, and state-of-the-art technologies at work. In order to launch, survive and grow in this market, eCommerce players will have to take into account all the important considerations. In this article, we made an attempt to cover nine crucial ones. We hope it gives the audience some leading thoughts on an ideal eCommerce growth strategy.
Your Retail Coach (YRC) is a retail consulting and eCommerce outsourcing company in India offering a wide range of services in retail offline, retail eCommerce and retail omnichannel catering to a multitude of industries.
Your Retail Coach (YRC) helps retail businesses with their web store and online marketplace sales management strategies and practices with a focus on developing brand awareness.
YRC assists retail businesses in managing their supply chain via services and support in warehouse management, procurement, inventory management, dispatch and team management riding on proven models of logistics and use of technology.