The evolution of the last-mile delivery market in GCC

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Staff Report

Dubai – The Gulf Cooperation Council (GCC) e-commerce market is growing rapidly and is expected to reach $23.7 billion by 2022 rising at a rate of 7.2% per annum, according to the findings of the latest study commissioned by Gulf Pinnacle Logistics and conducted by an independent research firm.
Established in 2014, Gulf Pinnacle Logistics (GPL) is a Dubai-based logistics and transportation company, which owns majority stakes in 4 assets involved in warehousing, CFS operations, student bus transportation and courier services.
Even though the Gulf region has a high internet penetration, one of the largest mobile penetrations globally and a relatively high GDP per capita, this hasn’t translated yet into a high internet retail penetration, thus, presenting a significant opportunity for growth, the study reveals.
Retailing activity done via the internet in developed markets like the US and UK ranges between 10-20% of total retailing, compared to emerging markets like India, Brazil and Russia at 5% and less developed markets like UAE, Indonesia, Saudi Arabia and Egypt at 1-2%. This regional lag has mainly been due to the shortage of quality supply of e-commerce providers for the past decade who very recently emerged into the market. Secondly, the unsophistication of the previous generation who has a high purchasing power but is not very well versed with internet and technology. However, e-commerce development and underlying retail growth, will translate to higher retail internet penetration overtime. As a result, the last-mile delivery market is expected to almost double in size, to $3.4 billion by 2022, the study predicts.
Shailesh Dash, Chairman of Gulf Pinnacle Logistics, commented: “Today, consumers make online purchases at least quarterly, spending c. 500 AED per year. Their top categories in terms of quantity and the largest share of online spending are electronics and fashion. However, GCC consumers are still looking for higher delivery performance, especially on the time and cost fronts, with late or long delivery time being the most common complaint. UAE and KSA consumers both value lower cost when making online purchases, however, UAE consumers value primarily fast delivery while KSA consumers find free or cheap delivery more important. In addition, almost 70-80% of consumers in UAE/KSA would be willing to pay for same day/express delivery.”
Shailesh Dash added: “We understand the challenges faced by consumers that come along with every delivery. Our subsidiary, Century Express, provides safe, secure, reliable and timely deliveries and has been delivering couriers and packages for the past 12 years.”
He also highlighted: “The need of the hour is, flexibility, to manage, match and exceed consumers expectations considering the busy and challenging lifestyles we live in. We offer customised solutions with competitive rates and constantly work with large and reputable clients who have consistently placed their faith in our services. We ensure seamless operations to our customers, treating each of their shipments as a top priority, with care and responsiveness.”
There is currently a global race on who can deliver shipments faster and more conveniently. Competition amongst courier companies and last-mile enablers has intensified. Globally, the pace of delivery has evolved from a 3-day window, to 1-day, to same-day to even a few-hours. Obviously, the shorter delivery time increases the price of services, and the markets will test the price points of few-hour deliveries considering the huge technological and manpower costs behind them.