UAE- based start-up founders identify the challenges of running an e-commerce business and share their thoughts on how to succeed in this space.
By Criselda Diala-McBride
E-commerce sales has been dubbed the next frontier for Middle East retail, owing to the region’s strong Internet connectivity, high mobile penetration rate, growing tech-savvy population, improved logistics network, and huge spending potential.
Outlook for the sector has been favorable, with BMI Research forecasting the regional e-commerce market to be worth USD 48.6 billion by 2022, while Deloitte noted that there is still plenty of room for growth.
Indeed, there has never been a better time to be an e-commerce start-up in the region, given the growing confidence in the sector. But starting and growing an e-commerce business is not without its challenges.
E-commerce sales pitfalls
Mona Ataya had to wrestle with a few challenges when she founded Mumzworld, the MENA region’s first e-commerce platform for mother, baby and child-related products.
“We launched the website at the end of 2011 when the e-commerce ecosystem in the region was still very much in its infancy. Basic enablers that e-commerce businesses depend on, like fast courier services, advanced payment gateways, technology talent, and suppliers with sophisticated supply chain systems were either non-existent, or in the very early stages of their development, so we had to create our own or work very closely with our partners to develop the frameworks needed to succeed,” she said.
Ataya, who serves as Mumzworld’s CEO, added that being a pioneer in this vertical space allowed her company to create very early relationships with the ecosystem enablers and work hand in hand to build their leading position in the vertical space of mother, baby and child shopping. The hard lessons learned in the early days paved the way for a stronger company with strong fundamentals.
Sara Farah, founder of White Almonds, echoes Ataya’s sentiments.
“E-commerce in the Gulf is still not as advanced as [in] the West, so we often face great challenges around logistics and payment gateway solutions, [forcing us] to continuously be creative and think outside the box,” said Farah, who launched the UAE-based online personalized luxury wedding gift registry in 2013.
“Another challenge is finding the right skill set to join your team, which sometimes results in creating teams from the West and having multiple offices,” she added.
The talent gap was also something that Amir Sebai, founder and CEO of Kanzeh – an e-retailer of custom-made T-shirts and hoodies – had to contend with. He said that when hiring potential employees, it’s important to look for candidates who are passionate about improving themselves professionally and helping the organization grow. One you’ve recruited the right team, training them is critical.
Another hurdle that e-commerce business owners face is operating on a limited budget, Sebai said.
“When [you’re strapped for cash], you need to do the most with the least amount of money spent. It’s very important to have a good budgeting plan, to help you save your money, spend it wisely and keep the cash flow in the organization,” he emphasized.
For Ibrahim Colak, co-founder and CEO of mrUsta, an online marketplace that connects customers to trusted service providers, a transformed customer mindset and an enabling ecosystem are essential to e-commerce success.
“Customers need to understand why it is better to buy products or services online. Unfortunately there is always a perception in the market that if a product or service is online, it has to be cheap. It takes time to explain to customers that online is all about convenience, better user journey, faster delivery time and easy payment options,” he said.
“At the same time, the ecosystem has to be [supportive]. It should be easy and affordable to obtain an e-commerce license, open and maintain an e-commerce bank account, the suppliers or last-mile delivery partners should understand and support the platform, while payment gateways or other technology partners should support the latest technology.”
Colak added that in the current environment, it takes more than six months to open an e-commerce bank account in the region, and the quality of service received by logistics or technology partners are not on a par with global levels.
Conquering these hurdles will allow start-ups to succeed in the e-commerce space. Entrepreneurs who spoke with Accelerate SME shared their thoughts on how to improve e-commerce conversion rates, and increase sales and revenue.
- Identify customer needs gap – Ataya said they adopted a customer-centric approach when designing the Mumzworld platform. “We identified [our customers’] unique unmet needs and we were able to deliver on that uniquely and with excellence,” she said. One of these needs is access to quality products, prompting Mumzworld to offer the most diverse, well-sourced, and widest-ranging catalogue for mothers.
- Ensure speedy delivery – Another factor that will improve customer experience is speedy and convenient delivery, according to Ataya.
- Offer everyday value for money, not cheap prices – In the GCC, products are generally sold much higher than global prices. But offering an everyday low price strategy is a way to address this concern, according to Ataya. “We are not a deep-discounting brand that buys and sells cheap products. We source only authentic products and price at an everyday low-price, and we remain transparent with mothers on this pricing strategy 365 days of the year. We do not inflate and deflate prices, rather we follow a value-for-money approach year round.”. Colak of mrUsta agrees. “We are very open and transparent in terms of price and service quality… At the same time, we make sure the price customers pay on our platform is within the market range and that they get the most out of it.”
- Be agile – Change is the only thing constant in the e-commerce space, according to White Almonds’ Farah. “This is key. Start simple and build up once you understand your consumer behavior.”
- Be innovative – Try different marketing strategies, advises Farah. “Listen carefully to your customers through feedback, reviews and marketing.”
- Pay attention to the user journey – “User journey is the most important part of our platform,” said Colak. “It includes the latest technology, but in a simple way that every user can easily understand and use.” This is vital, he added, as very complicated processes or features can drive customers away from your e-commerce platform. Kanzeh’s Sebai shares the same philosophy. “[In terms of] online shopping, it is very important to make everything easy and clear for the users in a way that they can complete an order with maximum of five clicks,” he said. “The less pages you take the user to, the more effective and the greater the chance he or she will complete a purchase.”
- Strike the right balance between supply and demand – Opening their platform to suppliers from which customers would like to get service has allowed mrUsta to balance the demand and supply on its platform.