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FOCUS: Logistics of an e-commerce start-up

by ASC Staff on Nov 16, 2016


Ali Al Darwish, founder of Alghaf.com, the first 100% Emirati owned E-commerce store in the UAE.
Ali Al Darwish, founder of Alghaf.com, the first 100% Emirati owned E-commerce store in the UAE.
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Brian Cartwright met Ali Al Darwish, founder of Alghaf.com, the first 100% Emirati owned E-commerce store in the UAE. Ali was happy to share his views on some of the challenges and opportunities for E-commerce in the region.

Q: What are the main logistical challenges you face as an E-commerce start up in this region?

Although E-commerce business is booming in the region; the right solutions to support and nourish such business still need to be further developed. E-commerce businesses are challenged with the massive upfront investment considering the platform, logistics and payment gateway integrations. E-commerce start-ups are further challenged on their integrity and legal establishments. From personal experience I can say some of the key logistical challenges a start-up might face are ensuring the quality of the products, versus the cost and then the speed of delivery.

We can easily categorize those three things into 2 main categories firstly the “Commercials” which would include the quality of the product and the cost, what products to sell, and then which distributors or manufacturers to work with. All of this has a huge impact on the potential margins. The second category is “Performance” an important key to success in E-commerce is how fast you can deliver the product.

Some large E-commerce businesses have developed their own logistics arms in order to try and gain more control of their logistics by cutting out additional steps or service providers with the goal of ultimately speeding up the process.

However, for most startups likely they will be depending on external courier companies, hence their performance is heavily dependent on the courier’s policies, processes, integrations with their platform and so forth, so the logistics alone can have a major impact on the success or failure of the business.

Q. What other challenges do you face in terms of payment?

Another thing to consider in this region is challenges with integration as many large courier companies have their systems integrated with most of the well-known E-commerce providers, however, since most of those E-commerce platforms are US and Europe based, further integrations are needed to have the logistics provider appropriately integrated into the shopping cart for this region which can be costly at times.

A lack of options in terms of payment gateway’s is another area that needs to be considered as there are many international payment gateways in the market and none of them are suitable for the region.
For example, Paypal, can transfer money to UAE based account with a transfer cost, but the actual checkout from your website has to be in USD or any other currency that is supported by Paypal. For example, AED and all the GCC currencies are not supported. Hence selecting the right payment gateway is also one of the main pillars to have a successful ecommerce business.

Q. How are you mitigating these challenges?

At Alghaf.com we managed to overcome these challenges and we continue to expand rapidly, and I have to say I am really pleased to have the opportunity to be part of the growing E-commerce business in the UAE and wider Middle East, and in particular I see a huge opportunity for the UAE logistics sector to really firm up its position as a key international logistics hub by embracing and supporting the continued growth of the global E-commerce market.

Brian Cartwright is the Founder & Managing Director of the Top Management Resources Group. A respected thought leader with extensive networks and knowledge of the sector he is the ideal person to discuss and share the senior executive view of the market.
 


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