Online grocery shopping is severely untapped in the Middle East - BulkWhiz CEO

Despite smartphone penetration and high Internet usage, grocery e-commerce is still playing catch up

  

Less than 1 percent of the Middle East’s grocery retail market, worth $175 billion, is transacted online, Amira Rashad, co-founder and CEO of BulkWhiz, told Zawya in a video interview. This is despite the MENA region’s lead in smartphone penetration (65 percent+), Internet usage and higher-than-average disposable income.

“Online grocery is severely under-indexing here compared to other parts of the world. There hasn’t been a sizeable shift to e-commerce yet. Globally, online grocery shopping has been a laggard in the e-commerce space. The Achilles’ heel has been logistics, given the highly perishable nature of the goods,” Rashad said.

In developed markets, around 7 to 12 percent of the grocery market is online in various formats. With grocery accounting for a third of household disposable income in the region, the industry in the Middle East is ripe for disruption in the e-commerce space.

PLAYERS IN E-GROCER SPACE

There are few players in the UAE’s online grocery space. Current players in this market include traditional brick-and-mortar retailers such as Carrefour and LuLu, who have started online stores in the past 24 months; pure play operators, such as BulkWhiz (a Dubai-based bulk grocery e-commerce platform that uses artificial intelligence to personalise consumers’ online grocery shopping experience); and online marketplaces.

“Of late, players who were in the food delivery and logistics space are now entering the on-demand grocery delivery space such as Careem, Talabat, etc. That space is [starting] to be overcrowded,” Rashad added.

Only 27 percent of consumers in the MENA region are interested in ordering groceries online, while 58 percent still prefer to buy their groceries at physical stores, according to Wamda’s report, “2019 Online Grocery Retail in MENA”. This could be because of a general aversion to buying perishable goods online, with most consumers instead preferring to see, touch and gauge the freshness and quality of the goods themselves.

The e-grocery market is currently worth $200 million in the GCC and Egypt, accounting for less than 1 percent of the e-commerce space, the Wamda report noted. The high food spend and large basket sizes make the MENA region an attractive market for e-groceries.

SPIKE IN E-GROCER SALES

Following the coronavirus outbreak, e-groceries are seeing an unusual spike in sales as people prefer to stay indoors for fear of contagion. “With kids at home for a long spring break, it’s forced a lot of families to try online grocery shopping for the first time or stock up on essentials, as they don’t know how long this episode will last,” Rashad explained.

BulkWhiz raised a multi-million-dollar Series A round in Q4 2019. Rashad said this is an excellent time for entrepreneurs in the UAE to raise funds. She advises startups hoping to make the right impression on investors to understand the metrics of the market, how big the opportunity is, what differentiator they are bringing to the table and, most importantly, how they can make a dent in the market.

Despite the UAE being one of the best places in the MENA to start a business and a home to competitive talent, hiring is still a challenge for startups.

“Most people are used to coming to the UAE to work with a corporation or government entity. But the concept of joining a startup is still relatively nascent, and this can be an impediment for a smaller SME. But it’s getting better,” Rashad said.

GENDER BALANCE SKEWED

Although women-led startups have been statistically proven to offer a higher return on investment than those led by men, women’s representation in the UAE entrepreneurial space doesn’t even count in the high single digits.

Besides calling for affirmative action from the government and corporate entities, Rashad also suggested that families should encourage girls to study in STEM fields, acquire soft skills, learn to pitch, and build formal and informal networking forums to address the gender imbalance.

“The government directive in promoting a strong women line-up in leadership has now started to trickle down to corporates and family-run businesses,” she added.

(Writing by Disha N, editing by Seban Scaria)

(seban.scaria@refinitiv.com)

#MENA #E-COMMERCE #UAE #ONLINE #INTERNET #GROCERY #CORONAVIRUS

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© ZAWYA 2020


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