The Online Grocery Industry in UAE has been growing rapidly since
inception and is currently positioned to be in the growth stage. Major players
entered the market between 2015 and 2017 & currently there are more than 25
companies offering grocery delivery services in UAE. In addition to this, the
market value has doubled from 2016 to 2019, suggesting that consumers are
starting to get more comfortable ordering essentials foods items online.
Prioritizing door step delivery over long queues & high internet
penetration have been the factors responsible for growth in the region.
In conversation with Ms. Amira
Rashad, Co-Founder & CEO at BulkWhiz, we attempt to identify the key
trends in the online grocery space and how BulkWhiz differentiates itself from
other service providers.
Here are some excerpts of the
interview:-
How did you get associated with
Online Grocery Delivery Industry? What was idea behind introduction of Bulkwhiz
in UAE?
I have been associated with the consumer & retail industry since the
beginning of my career. When I shifted to UAE, we observed that the ecommerce
was not as developed in the region, even though the internet penetration is
high. I felt that for working mothers, being one myself, we don’t have enough
hours in the day and worrying about grocery shopping is the last thing we
wanted. This was the idea behind starting Bulkwhiz.
How has the market transitioned
since its inception?
When Bulkwhiz started, 3-4 years ago, the industry was very nascent.
There was only one player, Souq which majorly sold fashion & electronic
products back then. In addition to this, it took time for the big supermarket
chains to built online capability. They were under the impression that if
supermarket chains would set up e commerce platforms, they would be undermining
the mall business. But due to increasing
number of consumers seeking convenience, the market began to gain traction.
Which business model have you been
following to fulfill customer orders?
Bulkwhiz has been operating though pureplay model. We are managing
everything in house. We differentiate ourselves from other pureplay players by
our way of managing inventory. We use AI to determine the orders & adopt
the just in time inventory model to fulfill customer orders.
What have been the factors
responsible for growth in the market?
Consumer need & demographics are the prominent determinants for
growth in an industry. UAE has a population which is predominantly under 30.
This population is highly influenced by internet and is ready to outsource their chores, such as grocery
shopping to reliable vendors online.
From supply perspective, there were not enough players in the market 4-5
years ago. In addition to this, there were not enough logistics players to
complete that experience and deliver the services.
What are the key considerations
for succeeding in online
grocery delivery market?
Grocery shopping is a completely different experience from any other e
commerce platforms. It signifies urgency. It touches your life 52 times a year
with 40-50 odd items in the list. There needs to be a completely different level
of service.
Second would be personalization. Grocery is a very personal purchase. It
reflects the needs of a household on a weekly basis. It has a lot of dependence
on how much you know that person. If you don’t know me, if you can’t
personalize this to my usage, you’re basically wasting my time. This is how
millennial operate. Another element that drives e commerce adoption is trust.
Customers let down their guard when they trust you.
What are the current challenges to
Online Grocery Delivery Market?
Customer Service plays a very important role and act as a challenge in
the industry. Customers are skeptical if they’d have to spend too much time on
phone while returning or exchanging the order. Companies should be focusing on
establishing long term relationship instead of transactions. Bulkwhiz had a
customer returning 20kg of dogfood in first week of our operation. The food was
not working for the dog as she had a tiny dog. We initiated the return, no
questions asked. Now the same lady is on 83rd order.
Secondly, as most products are imported so supply planning is a bit of a
challenge. The big suppliers tend to prioritize the big supermarket chains. We
have seen most of the big brands owners prioritizing e commerce
disproportionately. Even though, we are significantly smaller in size than the
supermarket chains, the big brand owners have been working with us increasingly
to reduce the chances of stockout & prioritizing us as much as supermarket
chains. We are using AI in combination with JIT model to strike a balance.
How has AI impacted the industry?
AI has enabled in creating a personalized experience from the front end.
It has enabled smooth functioning of supply chain from the back end. AI is a
huge boon to this sector because traditionally, the inventory management &
demand planning has been a challenge & AI has helped in bridging that gap.
How are you tackling the issue of
wastage?
Since we follow JIT sourcing model, we don’t keep the inventory for more
than 1 day. In case of fresh food, we don’t keep the inventory at all. It comes
in the morning & goes out in an hour. By keeping smaller inventories
batches & having separate supply chain for perishable we are optimizing the
wastage of food to a great extent.
According to you what should be
companies focusing on? Operational efficiency or regional expansion?
Firstly, the companies should focus on increasing the number of consumers
on the online grocery delivery platform. Second would be operational efficiency
as that at the end of the day would reflect better consumer experience. Third
would be regional expansion.
For any queries or feedback, reach
out at namit@kenresearch.com
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Ankur Gupta, Head Marketing & Communications
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