The international logistics end-delivery market in the United Arab Emirates has a bright future due to the strong demand generated in the wake of the global coronavirus outbreak. Citing the latest research data released by MordorIntelligence, they said the end delivery market in the UAE is expected to achieve a CAGR of 7.5% between 2020 and 2025. The growing popularity of e-commerce and the growth of international trade in the region will drive growth momentum over the next five years, they said.
GPL chairman ShaileshDash said the last mile market is emerging as a strong segment in the wake of the coronavirus outbreak. "The UAE's express delivery sector is growing steadily, with strong growth in e-commerce and rising demand due to the pandemic opening up prospects for the region, which was valued at $4.5 billion last year," Mr. Dash said.
Commenting on Technavio's latest research report, Dash said the global last mile market will grow at a CAGR of 5% to reach USD 90.63 billion between 2019 and 2023. The Gulf market is no exception and will grow in line with international trends.
"In the UAE and the Gulf, consumers face challenges in terms of parcel delivery and cost-effective delivery services. This includes high costs and long lead times as the rapid development of e-commerce puts more pressure on existing delivery systems and generates more business opportunities."
In the Middle East, 80% of cross-border buyers choose cash on delivery. Even in the Gulf States, where credit card penetration is relatively high, Internet users prefer cash on delivery.
The main concerns as a buyer are:
1. Relatively backward local infrastructure supporting cross-border e-commerce, such as network, payment, logistics, etc.
2. Especially in terms of payment, the penetration rate of mobile payment is very low
3. Local consumers have not yet formed a credit system for online shopping, and they are generally worried about transaction fraud and data security. Cash on delivery can greatly reduce consumers' doubts about purchasing;
As a seller, the main concerns are:
1. The risk of rejection increases. At present, under the COD mode of cross-border logistics, the average signing rate is only about 60%-70%, and some data show that the signing rate in some markets is even less than 50%. Nearly half of the goods sent to customers are rejected for various reasons. Delivery time is too long to forget to buy, the packaging of goods is not exquisite enough can become the buyer rejected commonplace;
2. The payment collection period is prolonged and the selection of payment collection service is limited. Under COD mode, the seller's payment is collected from the consumers by the logistics company on behalf of the seller after the goods are delivered, and then the logistics company makes the payment to the seller according to a certain settlement period. It usually takes 1-2 weeks from successful delivery to actual payment. But when it comes to countries where remittances are difficult, it sometimes takes more than a month to get the money back. If the buyer receives the goods, the payment can be real-time account, no doubt can greatly improve the merchant capital turnover rate.