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Cart in the Web

Cart in the Web

Could online retail alter the way we buy things in the region?

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April 28, 2011 3:41 by



BOOKWORMS REJOICE. Stores such as electronics retailer Sharaf DG and apparel brand Levis’ have featured their products on Souq.com. Jashanmal Bookstores, a subsidiary of Jashanmal Group – one of the region’s oldest retail and distribution companies, also uses Souq.com as a platform to sell books online. In January 2010 the chain launched Jashanmalbooks.com, which lists titles, product information and prices before redirecting users to Souq.com to make their purchases.

NarainJashanmal, general manager of Jashanmal Bookstores, said all his company’s online retail is conducted through Souq.com, rather than its own site. “After a fair amount of analysis, it seemed to be the easiest and fastest way to get our store online. Souq.com is robust, it has got a solid user base and for people who are used to using it, the payment works fine and the delivery works fine.”

“At this point in time we have around 5000 titles listed,” he says. “The aim is to have at least what we have got in the store – about 15,000 to 17,000 titles – online.”

Nahel.com is another business-to-consumer online retailer. It launched in 2009 and offers products including electronics, perfumes, books, video games, and watches.

Most retailers in the region seem to be opting for hosted platforms such as Souq and Nahel to sell their products online, but others such as French supermarket chain Carrefour have set up their own shopping websites. Carrefour sells non-food items on ic4UAE.com, which was set up last year.

Online shopping has great potential to attract customers due to the variety of products available online and the convenience that comes with shopping from the comfort of your own home. It also makes it easier for customers to compare prices online and fish for more product information.

Meanwhile, apart from saving on costs associated with setting up and managing a physical store, marketers and brands can also take advantage of the measurement tools available online.

BUGS IN THE SYSTEM. Regardless of the options available to brands and customers, there is a long way to go before online retail will be truly explored in this region.

“It’s a combination of things,” said McNabb. “It’s the combination of a banking system that doesn’t allow for effective and efficient payment gateways. It’s retailers in the region who traditionally take a bricks-and-mortar approach and have been very slow to adopt online, and we lag.

We have just started seeing retailers in the UAE bringing [secure payment gateways] to the online store environment. Most people transacting online until recently have had to do so on a cash-on-delivery basis. Now we are seeing sites like Cobone and GoNabit allowing credit card transactions. This is just the start.”

There is an opportunity for online retail to grow in the region but a few things have to be sorted out. Among them are adoption rates, payment gateways, logistics and broadband.

ADOPTION RATES
It’s a common complaint that consumers in the region are hesitant to shop online. Some attribute this hesitation to a fear of credit card fraud, while others attribute it to the affinity people have to the physical shopping experience.

“There’s a learning curve that is involved,” saidSaeidHejazi, managing director and founder of Nahel.com.

“The [market] is still trying to understand the benefits of online locally. Had these same people been living in the West, they would have been shopping online since the year 2000,” he added. “It is just about showing them and educating them that they get the same benefits here, locally.”

However, Hassan Mikail, regional manager for e-commerce services at Aramex (the shipping firm’s Shop and Ship service can deliver goods ordered online via a virtual postal address abroad) said that customer resistance is not the main issue. “Consumers have been prepared for it before businesses,” he said. The main resistance appears to be on the retailers’ side.

“Legacy retailers here – the brick-and-mortars – still, unfortunately, view online shopping as a competitor as opposed to a sales channel with few overheads. So there is a mindset there that needs to evolve,” he said.

“However, they will turn around,” he added. “We had the same problem in the US, 15 years ago. [Online bookstore and general retailer] Amazon took years to start making a profit but they started early. And yes, they were treated as competitors but they managed. It shifted. It changed.”

Now, Amazon is one of the largest online retail businesses in the world.

As far as the look-and-feel aspect of shopping in a store is concerned, the online experience doesn’t replace the offline experience but enhances it, said McNabb. Some people browse brands at the store but buy them online, he added. First-timers may take a while to get used to online, but those who shop regularly often have an idea of what size they will need or what product is going to be like, especially if it is being bought from a trusted retailer. At the same time, there are websites that enable users to zoom in on goods or view them from different dimensions.



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