A team at Aramex is working to partner with Middle Eastern online retail sites, including the UAE's Nahel.com, to build more robust payment and delivery systems to back electronic commerce.
Aramex banks on web retail
Online retail is the next frontier for Web entrepreneurs in the Middle East as the region lags the rest of the world in this crucial e-commerce sector, says Fadi Ghandour, the founder of the logistics group Aramex. While retail has become a main feature of the internet abroad, the industry remains marginal across the Middle East. Few of the global market leaders have set up local versions of their sites, and most will not ship goods to the Middle East.
But a dedicated team at Aramex is working to partner with Middle Eastern online retail sites, including the UAE's Nahel.com, to build more robust payment and delivery systems to back electronic commerce. In the US, similar moves by logistics groups such as FedEx were seen as key to the emergence of online shopping as a mainstream service. "Two things are needed here: one is the ease of moving goods across the region, which is still difficult. But the other one is to make it affordable for the consumer to buy online," said Mr Ghandour, who founded Aramex in 1982. "In the US, you can do that, because the big boys have such incredible volumes they can afford for Amazon to give free shipping.
"I don't know when we will reach that here. Shipping is still a big chunk of the purchase. But we need to shrink it until customers don't need to worry about it as part of the purchase price." Online shoppers in the UAE on average spend more than consumers anywhere else in the Middle East, Africa and South East Asia, a survey released this month showed. The average local online shopper spent US$1,038 (Dh3,812) in the fourth quarter of last year. Singaporeans were the second-biggest spenders with an average of $779 in the same period. But concerns about the safety of online payments and challenges in the delivery process are holding the industry back in the region, analysts say.
Aramex aims to address the payment concerns by deepening its cash-on-delivery service. And by partnering with online retailers, the company hopes to create the volume of deliveries needed to bring costs down - and eventually include them in the price of the goods. "What we're telling entrepreneurs and e-commerce sites is, focus on your front end and we will do everything else, from order-processing to customer service, to call-taking, effective delivery and collecting the cash," Mr Ghandour said.
Aramex has already built a healthy business enabling Arab customers to shop on European and US websites, which typically do not ship products to the Middle East. Aramex's "shop and ship" service provides subscribers with a UK or US delivery address and forwards packages from these locations to the customer. "That business is booming. It's huge, just huge. And it is all by word of mouth. You'll rarely see us advertising this," Mr Ghandour said. "We're doubling the size of our warehouse [at JFK International Airport in New York], just to address the demand for shop and ship."
But for Mr Ghandour, a prominent Jordanian entrepreneur and investor, Aramex in the next stage of its growth will become a linchpin in a regional internet retail industry. As an early investor in Jordan's Maktoob Web portal, acquired by Yahoo last year, Mr Ghandour is now a part-owner of Souq.com, a regional online auctions website that was spun off from the Maktoob Group into a new holding company as part of the transaction. Yahoo paid $164 million for Maktoob, according to financial statements filed last month.
Along with his work at Aramex, Mr Ghandour is spending much of his time coaching young Jordanian entrepreneurs and investing in a number of internet start-ups. Aramex is open to the idea of "incubating" e-commerce start-ups within its offices, he said. "I have no doubt at all that an e-commerce site will be the next Maktoob," he said. "We don't know who it will be yet. It is still an entrepreneurs game, and the space is ready to explode."