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Everyone’s getting into UAE’s online grocery business, now valued at $1b plus

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It’s all in the packaging… and delivery. Get that right and UAE’s online grocery shoppers will come back for more. Image Credit: Virendra Saklani/Gulf News

Dubai: There’s still a lot of room in the UAE’s online grocery space as more players put up their ‘stalls’…. even those that haven’t been connected with the selling of fruits and veggies and all sorts of everyday needs. But all these players – even the new ones – are intent on making their presence known, with online grocery sales expected to go past $1 billion for the first time by year-end.

That explains why Sharaf DG has made a move into grocery… and it’s not the only one. “New players like Dubai Store, Sharaf DG, Spinneys [are] entering the market on own platforms,” says a new retail sector update from RedSeer Consulting.

For Sharaf DG, the addition of grocery/consumer goods to their digital platform makes sound sense. As a pure-play electronics retailer, it is now the biggest name in the business, both online and offline. It has built up a sizeable logistics network, and which can be used for other categories other than sourcing and delivering tech gadgets. This is exactly what Sharaf DG hopes to attain by pushing into grocery.

In other words, do the reverse of what LuLu or Carrefour have done with their own online push – start on their core product and then keep adding more categories.

Expecting more

It will help them in the long run – shoppers are already expecting more. “UAE consumers, while more satisfied than [those in] Saudi Arabia, feel there is significant room for improvements with their current egrocery provider,” says the RedSeer report. “Six in 10 people feel egrocery players can improve significantly.”

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An AmazonFresh [ick up point in Seattle. UAE’s hypermarkets are now rolling out order and pick up service at key locations. Omni-channel has finally come calling in UAE’s online grocery space. Image Credit: AFP

Quick is in

Which explains why some online grocery sellers are now focussing on the ‘Q’ service, by delivering within 30-40 minutes of the order being placed. The likes of Talabat, Hungerstation, Nana Direct, El Grocer and Carrefour (Now) are the ones leading the charge on “Q-commerce”.

Who’s leading?

According to RedSeer, “horizontal” players have captured the highest value share and volume of online grocery sales. The horizontal tag applies to the likes of noon and Amazon, which operate as marketplaces and allows third-party vendors to sell their merchandise through them.

Currently, noon stocks up on all sorts of daily consumables, including fresh produce. Amazon, which does stock fresh in the US and elsewhere, should at some point start doing the same thing here as well.

Need some fine-tuning

Online grocery service platform still have some work to do on ensuring a satisfied consumer. Through the lockdown phase, when they were flooded with orders streaming in, the delivery side of the business showed up some glaring deficiencies.

Shoppers complained about deliveries with only part of their orders in them. There were instances when orders never got fulfilled, or took way too much time. Long delivery times was rated as the biggest grief UAE online shoppers had, followed by missing items in a delivered order. Third comes the slow pace of tackling consumer complaints.

Get these right… and online grocers can look ahead to maintaining double-digit growth for some years to come. And have to deal with more new entrants.

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