The Rise of Online Groceries in UAE

Published August 16th, 2018 - 09:20 GMT
Online stores in a race to your doorstep as trend catches on. (Shutterstock)
Online stores in a race to your doorstep as trend catches on. (Shutterstock)

The UAE is known to bring in disruption through unexpected channels and the latest is the rise in online groceries.

Top names like Emaar's noon, Wadi.com, Choithrams, Al Adil, el Grocer, Bulkwhiz and many more are in a race to grab the ever-swelling market. With each competing to get your order at your doorstep in minimum time, the question is who will win the race?

A single search on Google will result in a minimum of eight to 10 operating online groceries in Dubai alone. So why is everyone in a rush to start an online grocery?

Amira Rashad, CEO of BulkWhiz, said: "Online groceries have been on the rise in the UAE and across the region for the last two to three years. Everyone from established offline players to large pure play e-commerce sites to new startups have entered the space. This is because the market is ripe for change driven by macro consumer trends. Digital natives are now starting to become heads of households, and are making their own decisions on where to buy groceries."

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"Smartphone penetration is at an all-time high. Moreover, technology is now enabling greater customisation of customer experiences, optimising logistics and availing data otherwise unavailable to manufacturers to make more efficient product and marketing decisions."

"Every participant in the retail landscape benefits from the rise of e-commerce."

"The UAE was a natural place for this industry to take off since people already were used to calling the corner store for last minute ingredients drop-off right before dinner. Taking it digitally was an obvious evolution. Doing it better than everyone else by focusing on customer service and getting larger retailers into that dynamic market with our operations is the predictable next step," says Nader Amiri, founder and CEO of el Grocer.

"It's absolutely normal. The new world is being made in Dubai as we speak. People here are dynamic, open and willing to pay for anything that gives them an edge, a free half-hour to spend with their kids, anything that makes their life more convenient or saves them time. Ordering groceries online, or on your smartphone for that matter, is one of those ideas that is so simple, so elegant, that people often tell us they wonder how come they never came up with it, especially in the UAE."

Recently, Emaar's noon made a foray into online groceries as a customer-focused and Arabic-first e-commerce platform. It brings a growing product assortment thanks to connections with the local retail community. Noon presents an alternative retail choice through its website or dedicated iOS and Android apps.

Similarly, shopinc.com made its launch in the first quarter. Wadi.com, meanwhile, was launched earlier this year in Riyadh, Jeddah and Dammam. It is set to make its debut in the UAE soon.

Pratik Gupta, co-founder and managing director of Wadi.com, said: "Online grocery is the next big game-changer for the Middle East. Globally, mature e-commerce markets like the US, China and India have already gone through the boom that the UAE is currently going through. As consumers get comfortable shopping online and enjoy the freedom of shopping anywhere-everywhere, different facets of retail will continue to come online. Now, with groceries, a whole new layer is added to the online marketplace in the UAE. The demand for online groceries has only just begun and will increase significantly in the future."

But will the surge in online stores hamper brick-and-mortar grocery stores?

Even though measures show us more sales going online, the actual consumer behaviour is a little more complicated, as the lines between online and offline channels continue to blur. Traditional brick-and mortar retailers are expanding their digital presence, while pure-play retailers are opening physical stores.

The notion of being connected is taking on a new meaning: Retailers are implementing innovative digital technologies that are transforming the shopping experience in order to become more relevant to consumers' lifestyles and shopping occasions.

"There may be some impact on offline in the long term. The e-commerce penetration rate in grocery in the GCC is expected to double or even triple in the next two years. This is significant for online grocery players. In the long term, we can look at penetration rates like five per cent, similar to other markets like the UK and USA while the offline players will look at developing their online platforms," added Gupta.

Faisal bin Haider, founder and chief executive officer of Dukkaani Smart Shopping, said: "As the world evolves, so do people's lives. Today's lifestyles have become better, easier and more enjoyable. However, it is unfortunate to see that grocery shopping has remained fairly traditional; every week, the consumer repeats the same mundane shopping cycle: buying goods from an air-conditioned warehouse full of stacked products. We always receive positive response from consumers because of the easy and new way of online shopping."

Traditional brands like Choithrams and Al Adil have also gone down the online route despite having multiple outlets in the region.

Kavita Chakravartty, senior marketing manager at Choithrams, said: "Online groceries are growing in the UAE as customers are getting more confident about payment gateways and are technologically savvier. With the UAE having one of the highest penetration of mobile phones and a younger population, it's not surprising that these trends are catching up. Besides this, as time is at a premium and with our lives getting busier, more and more people prefer ordering online."

Al Adil, which has started its online operations despite having multiple outlets in the region, see this trend to only add to consumers' benefits of having a wider choice when it comes to grocery shopping.

Dr Dhananjay Datar, CEO of Al Adil said: "We are witnessing a steady increase in the number of online shoppers. An interesting trend is the number of online shoppers are more during weekdays compared to weekends. This reflects the convenience associated with online purchases. At the moment, both online and offline stores will exist in tandem. I believe stores have the role of supporting online sales. There are some customers who will order online and come to the store at their convenience to take the deliveries. It is too early to say until when both these will coexist."

By Sandhya D'Mello


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