Polar Rabbits are making inroads in the Middle East, but delivering packages to uae princes isn’t easy
Rabbits from Southeast Asia have started hopping to the Middle East.After the acquisition of Best Express, which basically completed the construction of the domestic express network, Qitu officially announced a new layout some time ago, starting the express network operation in the United Arab Emirates and Saudi Arabia (referred to as “Saudi”).The company launched its Middle East expansion plan in April last year, according to sources. After eight months of inspection, site selection and trial operation, it officially launched its delivery network in the UNITED Arab Emirates and Saudi Arabia.Prior to the official announcement, Qitu has established its own nationwide distribution network and localized storage system in the UAE and Saudi Arabia, covering all provinces and regions in the region.The Middle East occupies a strategically important position between Africa and Eurasia, and last year the Saudi Crown prince launched a “Transport and logistics strategy” to position the kingdom as a logistics hub connecting the three continents, improving all transport services.At this time, extremely rabbit’s entry, ambitious.Express giant overseas “war”, the Middle East people online era as a grown up Courier companies from overseas markets, extremely natural layout of the Middle East, rabbit today, it’s express network has already covered China, Indonesia, Vietnam, Malaysia, Thailand, Philippines, Cambodia, Singapore, the united Arab emirates and Saudi Arabia in 10 countries.And domestic delivery giants are also in action.In September, A wholly-owned subsidiary of SF Express completed the purchase of 931m shares in Kerry Logistics, an international logistics company founded by Robert Kuok, Malaysia’s richest man, in an apparent attempt to go global.Zto and YTO have also targeted Southeast Asia and accelerated their layout in terms of cross-border routes.In 2017, the policy encouraged key express delivery companies to build cross-border delivery networks based on the surrounding areas, covering the belt and Road initiative and facing the world, thus stimulating domestic express companies to go overseas for a while.However, the current express to the sea, with the previous greatly different.For one thing, although the fierce price war in the domestic express industry has been gradually extinguished by regulatory intervention, there is no guarantee that the peace will last long.It is precisely this price war that has enhanced the willingness of express delivery companies to expand overseas markets.Second, there is a clear signal that Alibaba is getting serious about overseas markets.In the adjustment of Ali’s organizational structure, Jiang Fan was in charge of ali’s two overseas businesses, while Zhang Yong also raised the overseas business to a very high position in the group, specially emphasizing that overseas business may become one of the main growth drivers of Ali in the next few years.Alibaba’s move will directly drive tongda, which has a close relationship with alibaba, to accelerate its overseas expansion, while changes in the Middle East market are also attracting the attention of e-commerce and express delivery companies.E-commerce growth in the Middle East has been slow for a long time, with online retail sales accounting for just 2% of total retail sales, and even in the GCC it accounts for just 3%.But the pandemic is changing that.In just one year, e-commerce in the Middle East and North Africa grew 52 per cent to $22bn in annual gross merchandise transaction (GMV) by 2020, according to RedSeer;The industry is expected to grow another 35 per cent to $30bn a year in GMV by 2021.The United Arab Emirates, Saudi Arabia and Egypt have the highest penetration rates for online shopping, even saving Fetchr from collapse in 2019.The epidemic indirectly fostered the habit of online shopping in the Middle East, and their recognition of online shopping is becoming higher and higher.In a report released by Checkout, 47 percent of consumers in the Middle East said they expect to shop online more frequently in 2021, and only 15 percent expect their online shopping frequency to decline.As the battle for e-commerce heats up in Southeast Asia, the Middle East may be the next gold mine.Who will move the Cash society in the Middle East?The Middle East and gulf region is definitely one of the few places in the world that is suitable for the growth of e-commerce model in terms of the degree of mobile and consumer consumption level.The region has a population of more than 54 million, a per capita GDP of more than $70,000, and leads the world in Internet penetration.The UAE has an Internet penetration rate of 99.2%, Saudi Arabia 95.7 percent, and more than half of the country’s population is young, who are familiar with social networking, e-commerce, gaming and so on.E-commerce giants have also targeted this market for a long time. Amazon, AliExpress, JollyChic, SHEIN and other cross-border e-commerce companies have entered the Middle East.Take SHEIN, for example. It topped Al Bawaba’s list of the top five apps in the Middle East.SHEIN has been downloaded more than twice as many times on Apple’s App Store and Android’s Google Play, with a total of 17.52 million downloads, according to the data.Amazon has also been surging in popularity in the Middle East since its purchase of Souq, while local ecommerce Noon has the highest penetration in the UAE and Saudi Arabia.At present, the e-commerce market in the Middle East has gradually formed a confrontation between international giants, cross-border e-commerce and local e-commerce.However, the activity of e-commerce giants does not seem to be driving the growth of online retail in the Middle East, and the construction of logistics systems to accompany it is slow.The reason may be traced to the uncomfortable fact that Middle Easterners love cash too much.It has long been common in the Middle East for members of the royal family to buy luxury cars with cash, for local tycoons to drive with cash to reward their favorite anchors, for middle class people to travel without bank cards, and even for ordinary people to pay their salaries with cash in sacks.For e-commerce platforms, people in the Middle East prefer cash transactions so that they choose to pay for goods on delivery when shopping online, which leads to high return rate, low delivery rate and long payment period, and brings huge pressure on operating capital to merchants.Some 62% of online shoppers in the Middle East and North Africa prefer to pay cash on delivery, and 85% in Egypt, according to Bain.Research data from PayPal also shows that due to consumers’ low trust in online shopping and online payment, about 60% of online shopping in the Middle East adopts COD (cash on delivery) as the payment method.COD mode not only reduces the convenience of online shopping and brings load to merchants, but also causes trouble to the realization of “the last mile” of logistics.Since most of them choose to pay for goods on delivery, the delivery time of a single package has been increased, and there are often disputes with consumers because of the return of goods.Cash-toting couriers in the Middle East are also vulnerable to robbery.To expand their e-commerce and logistics businesses in the Middle East, foreign giants will have to change the Middle East’s long-held cash-using habits, which so far do not seem to be happening.Even local fintech companies and emerging payment methods have low e-payment volumes in the region as a whole.Cashless payments in the Middle East are clearly a long way off.Delivery in the Middle East is as difficult as the layout of Shangqingtian e-commerce giant in the Middle East, which directly promotes the service improvement of the logistics industry.Noon, for example, has invested a huge amount of money in localized logistics and warehousing, and his team can almost completely consume the platform’s orders.Amazon, for example, has also increased its investment in logistics and partnered with Emirates Post to deliver more than 1 million Amazon packages a year.It is difficult to meet the growing demand of e-commerce business only by relying on e-commerce platforms to build their own logistics, but it is still difficult for express companies to establish a climate in the Middle East.Fetchr, for example, was one of the brightest startups in the Middle East when it was founded in 2012. In 2018, a succession of founding executives left the company, followed by a call center crash at the height of e-commerce promotions.The infusion of new money has helped Mr Fetchr’s immediate needs, but it is not clear whether it will eventually revive him.The Middle East’s logistics infrastructure has not kept up with e-commerce growth, largely because the last mile has been difficult to solve.On the one hand, due to the imperfect infrastructure, the regional division in the Middle East is vague, and the local house numbers and addresses are also very complicated. As a result, the address description of residents will be unclear, especially for migrant workers.One Courier in the Middle East said that when he started delivering packages, many of the addresses were never found, so he had to call the buyer repeatedly to ask and confirm. Another thing he had to confirm was whether he could deliver directly to the door.This takes into account the special traditions and customs of the Middle East.In many parts of the Middle East, the idea that men should go out and women should stay at home is so ingrained that women, most of whom are housewives, are often restricted from interacting with strange men, even to pick up deliveries.Fetchr tried to solve the problem by employing women as couriers, but since many women must be accompanied by male relatives or in-laws in public, Fetchr had to hire family members to do the delivery, which increased the company’s costs.On the other hand, the Middle East has not yet established a logistics network similar to Cainiao, resulting in the work efficiency of couriers is very low.Couriers in the Middle East often have to re-load deliveries on their cars during the day after their phone calls go dead, text messages go unanswered and appointments go unsigned, and by the time the buyer replies, they are far from their original address, taking longer to deliver.The uneven distribution of online shoppers in the Middle East, coupled with the relatively sparse distribution of orders due to geographical conditions, makes delivery more time-consuming.Now, logistics company FODEL is interested in solving the last mile problem in the form of rookie kiosks, which it has teamed up with DHL to allow DHL customers to pick up their packages through FODEL’s network of kiosks, such as supermarkets, cafes and convenience stores.But what stands in the way of this model is that consumers are choosing to pay for goods on delivery. Without couriers, how do you deliver goods?In the Middle East, the last mile will continue to bedevil the giants who have come to dig for gold, and there may be more innovation to tackle it in the future.Dubai’s crown princes, for example, are launching a drone delivery program to build a delivery system and network using drones.If this can be achieved, it will largely avoid the barriers of infrastructure, traditional culture and user habits, thus improving the efficiency of warehousing, inventory and distribution.Of course, drone delivery is still a beautiful dream.