Delivery Services in the Middle East: A Guide for Retailers

Does your business require the services of a logistics provider to ship orders out to your customers? Perhaps you are a new market entrant in the Middle East, or you are reviewing the possibilities for outsourced delivery services.

In any event, you should find this guide of use. It offers a brief, but detailed overview of the urban delivery landscape in the region, and a slew of tips for meeting customer expectations and overcoming urban logistics challenges in the United Arab Emirates and the other nations forming the opportunity-rich GCC retail and e-commerce market.

Urban Delivery Services in the Middle East

The Middle East—and the GCC region in particular—comprise markets hungry for progressive models of urban delivery execution. That’s due, at least in part, to the extreme heatof the summer season, which can frequently reach 50 degrees centigrade. It can be uncomfortable and potentially even dangerous for people to leave the relative cool of their homes.

As a result, consumers have become very pro-delivery, supporting the growth of an environment in which home deliveries of everything, from online and traditional retail purchases, to snacks, meals, and drinks, are not a luxury, but a lifestyle element.

Against this backdrop, global carriers operating in the region are today facing stiff competition, and being challenged to update their service offerings, by regional and local delivery service providers that leverage technology as a means to differentiate.

Challenges and Challengers

Many of the challenger-companies in Middle East logistics, including Shipa Delivery, are startups, applying new approaches to delivery for both B2B and B2c markets. Their USPs range from apps and platforms that simplify order fulfillment, to ultra-fast collection and delivery services for packages.

That the latter is proving especially successful is hardly surprising. After all, at times, you can fry an egg on the sidewalk, or even cook yourself en-route to pick up a takeaway or retrieve the phone charger you accidentally left at the office.

As these innovators, along with the long-established global players, and regional incumbents battle for their share in the growing e-commerce logistics and on-demand delivery space, they face an array of challenges. Many have existed for decades, such as the informal and vague systems for home addresses used in Middle East countries. Meanwhile, some new puzzles relate to the phenomenal scope and speed of urban development in the region.

In response, local authorities, along with stakeholders in the private sector, seek to ease the complications of urban logistics, and industrial practices in general, by applying smarter approaches to urban planning. Their initiatives are transforming cities like Dubai into some of the most progressive and technology-friendly in the world.

An Upwardly Mobile Region

For businesses in need of urban delivery partners, the range of options is growing fast. Where ten years ago, the logistics industry in the GCC, for example, was antiquated even by the standards of that era, the region is now characterized by fast-paced change. Retailers today can choose from basic services in logistics, courier services, 3PL providers with chains of distribution centers and the ability to supply dedicated fleets, and on-demand deliveries from companies like Shipa Delivery.

It looks likely that the region will also be among the first to adopt next-generation solutions, such as drone delivery to link brands to their customers.

In Dubai, for example, the government is already working closely with private sector enterprises such as Germany’s Volocopter and US-based Vimana Global. The aim is to develop aerospace platforms allowing autonomous aerial vehicles to serve as taxis and eventually, to deliver packages.

State of the Delivery Industry in the Middle East

When viewed as a whole, the Middle East presents a range of urban logistics and delivery challenges very different from those facing providers in the West. The following are typical examples of the issues to be overcome by retailers and their logistics partners:

• Inadequate address systems: Delivery companies must often find delivery locations using nothing more than the recipient’s name and mobile phone number.
• Gender roles: In some part of the GCC region, women prefer not to answer their doors to males that they don’t know personally, making it hard for drivers to complete deliveries.
• Cash on Delivery (COD): Still the preferred payment method in the Middle East, cash-on-delivery presents complications for retailers and their logistics providers. Their drivers must accept and carry cash (a security concern), and systems must be integrated for the transfer of cash payments from logistics provider to retailer.

Aside from the inefficiencies that the above-listed issues generate, they also combine to create a further challenge for urban logistics specialists and their customers—an extremely high rate of product returns.

Reverse supply chain systems are stretched to the limit due to end-customers’ rejection of deliveries. Consumers in particular often…

• Run out of patience while waiting for their goods to arrive.
• Tire of answering their phones to drivers seeking turn-by-turn, landmark-by-landmark directions to their homes.
• Take advantage of COD payment terms to reject deliveries on arrival.

Of course, in addition to challenges inherent to the UAE and other Middle Eastern markets, the region also faces those that exist elsewhere, including:

• Customer-expectations for delivery services to get faster and cheaper
• Increasingly congested urban road networks
• The pressure to reduce the use of environmentally harmful fossil fuels
• The complexity of omnichannel logistics, especially relating to inventory placement

The Logistics Technology War

Where challenges are present, so too, are opportunities. Major players in the urban logistics sector are well aware of this, and are taking advantage of the latest technologies to overcome obstacles, improve service, and increase efficiency.

Indeed, the industry has reached a point at which technology is the only effective weapon in the competition for superiority. Most companies in the sector are already leveraging digital solutions to gain competitive advantage, as the following notable examples illustrate:

• Logistics giants are breaking away from traditional practices and are investing in urban lockers, secure delivery boxes for homes, collection points, and on-demand delivery services.
• Startups such Shipa Delivery are using GPS and smartphone apps to enable customers to have packages collected from one location and delivered to another within time windows of two hours or less.
• New digital platforms and fulfillment models are emerging and created a vast network of pick-up points, so consumers can collect their online orders when and where it suits them.
• Shipa Delivery is actively engaging female delivery assistants in its markets to increase the rate of first-time delivery success. The move is based on the premise that women in the region have no concerns about opening their doors to other females.
• Some have adopted the “What3Words” address system to overcome the Middle East’s postal-address inadequacies, reducing kilometers traveled by 22% and increasing last-mile delivery speed by 42%.
• Shipa Delivery is taking a technology-first approach to conquering logistics challenges for businesses and consumers, deploying its digital tools and fleets of urban delivery assets across the GCC. The company provides a range of delivery options, including next-day, same-day, and on-demand, all supported by real-time tracking via an app (for consumers) and intuitive dashboard (for enterprises).

The appraisal and examples above should give you a feel for the state of urban logistics in the Middle East. However, if your retail company is looking for a fulfillment partner in the region, or is a new market entrant, you may wish to know what to expect from consumers here. Perhaps even more importantly, you should be curious to know what your customers will expect from you.

Middle Eastern Cultural Norms and Technology

It’s hard to be fun when it’s all facts and figures. As we move on to look at practicalities though, let’s make things a little more lighthearted. After all, you’re probably ready for a bit of levity; now you know that your Middle East fulfillment operation will be challenged by…

• Vague addresses
• An insistence on cash transactions
• Social norms that differ from those in the West
• Increasingly demanding customers
• Omnichannel complexity
• Traffic congestion…

What’s a business to do?

Well, the first step is to take heart, because we have some good news for you. If you’re under the misperception that business customers and consumers in the Middle East are technology-averse due to cultural beliefs and sensitivities, you can safely think again.

Yes, indeed, cash is still king in the UAE, GCC, and the wider Middle East region. It’s also true that among the older generations especially, there is a distinct lack of trust in electronic payment channels.

In general, though, there is no conflict between Middle Eastern cultural norms and technology adoption. People here are more than ready to embrace digital tools and access efficient, convenient, and fast solutions for shopping and shipping.

As already mentioned, technology is the only answer to many Middle Eastern urban-delivery challenges. However, you can breathe a long sigh of relief, because you won’t be alienating your customers by partnering with a tech-first logistics company like Shipa Delivery.

What you will need to think about though, is how to meet the expectations of a very tech-savvy consumer population, among which practical, rather than cultural considerations drive perceptions relating to customer experience.

Consumer Expectations for Delivery Services in the Middle East

Let’s finish with a look at those demanding customer expectations we’ve been mentioning. They are worthy of your attention for the following reason.

Before you can differentiate your business with an outstanding delivery experience, you’ll need to know what it takes to delight a consumer in the Middle East.

Taking delivery lead time as an example, you will surely be wondering whether it’s best to focus on fast shipping, free shipping, or both. In reality though, unlike in some other parts of the world, this might not be the right question to ask.

Delivery Speed: It’s a Competition, But Not a Race

For instance, according to one prominent logistics executive in the region, consumers in Saudi Arabia prioritize cheap, or even free delivery, over speed, while the reverse is true in the UAE. Another expert source, speaking to Middle East Logistics, stated that the debate about delivery speed is no longer relevant. Instead, brands should focus on predictability, and solutions enabling them to deliver within a time window, and at a price, customized to suit customers’ needs.

That said, it would be a mistake to assume that delivery at a donkey’s pace is OK as long as it’s free of charge. Consumers in the Middle East are as loathe to wait for their orders as those anywhere else on earth. More importantly, in markets where COD payment dominates, the longer a delivery takes, the more likely it is to be rejected by a customer. No retailer wants to encourage rejections and see their revenue disappear into that dark realm of fulfillment known as the reverse supply chain.

Meet the Demand for On-Demand

If you want to succeed with urban delivery anywhere in the Middle East then, you should seek a partner that can offer two-day delivery lead times as a minimum.

Remember though, that your potential customers will probably be looking for next-day delivery as a standard, and perhaps even delivery on the day of ordering.

For maximum competitive advantage, the ability to offer deliveries on-demand is the gold standard to try and attain. Thankfully, if you shop around, you should find a logistics provider to help you achieve it—at a price your customers won’t find unpalatable. After all, on-demand food delivery has undoubtedly become a cultural norm in countries like the UAE, and consumers readily foot the bill to stay out of that relentless summer heat.

Coping With COD (It’s Not a Fisherman’s Tale)

Another vital element of customer service is the range of options you offer for payment, both for the products you sell and the fees associated with shipping them. Consumers in many Middle Eastern countries are warming up to the use of electronic payment methods such as e-wallets, and perhaps to a lesser extent, debit and credit card transactions. Therefore, the choices you give your customers for payment need not differ much from those in any other world market.

However, there is one big difference which your business will have to contend with—the dominance of cash-on-delivery (COD). As inefficient, and fraught with security risks as it is, you can count on falling short of expectations if you do not support it. Fortunately, most logistics providers operating in the region are well aware of this, and well able to manage cash-sales transactions on your behalf.

The process typically works something like this…

1) Your customers select COD at your online checkout, or the checkout counter if requesting delivery at a brick-and-mortar store.

2) You process the orders and pass instructions for delivery on to your logistics partner. Some providers will even be able to integrate with your internal systems, saving you from the need to manually place orders.

3) Your partner’s drivers will make the deliveries and collect the cash payments for the goods (along with delivery fees if you don’t offer free shipping).

4) Your partner will send you consolidated payments, for all the items delivered on your behalf, typically once per week.

5) If you offer free shipping to your customers, your delivery partner will invoice you, perhaps monthly, or even weekly, for its services.

Consider too, that even consumers paying by card might expect to receive their purchases before they trust you to relieve them of their digital dirhams. With that in mind, a carrier that can manage card payments at the point of delivery will give you an edge over competitors that only accept electronic payments at the checkout.

Success Needs No Address

Finally, if the whole deliver-by-landmark thing is giving you palpitations, take a deep breath… and relax, because here too, technology has come to the rescue.

Many Middle East logistics companies now have the tools to overcome address vagaries, which could take any (or even all) of the following forms:

• A software solution that helps its drivers find your customers
• A network of collection points that make it easy for customers to pick up their deliveries conveniently
• An in-house suite of applications that provide real-time delivery tracking and enable unintrusive communication using online chat, SMS, and even messaging tools like WhatsApp.

The Middle East: A Hotspot for Urban Delivery Development

As you might have concluded from the information in this article, the countries of the GCC and the broader Middle East are no longer technology deserts.

When it comes to advancing the speed, quality, and cost-effectiveness of urban deliveries, it seems the soaring temperatures and phenomenal e-commerce growth have lit a fire under the industry.

Whether you are in the logistics business here, or you are a decision-maker in a company that needs a slick and customer-friendly delivery partner, the possibilities are plentiful. Furthermore, they are growing apace as new and established providers innovate and launch new services oriented to the complex omnichannel fulfillment landscape.

Logistics is an industry that never stands still, so it will pay to review your fulfillment performance and needs frequently. We’ll do our part by keeping you up-to-date as developments unfold, and by continuing our quest to lead the field of technology-assisted delivery services in our region.

If you’d like to know more about Shipa Delivery’s next-day, same-day, and on-demand solution for urban package collection and delivery, Contact us today. We’ll be delighted to answer your questions.