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Competing with the web giants

Competing with the web giants

Despite the rise of online shopping, UAE retail websites charge up to 50 percent more than their US counterparts. A strong ‘mall culture’ and poor postal service are also holding back the fledgling industry.

January 14, 2010 2:16 by



But commentators point to certain barriers which could mean that local sites will never truly compete with the UAE’s malls – and certainly leave them unable to offer the kind of discounts available through giants like Amazon.com.

Yousef Tuqan Tuqan, CEO of Flip Media, the largest interactive agency in the Middle East, says that the UAE’s inefficient national postal service and disorganized address system is part of the problem.

“If you have to go to a post office to collect your items, you might as well go to a mall. There is a general mistrust of the postal system here. And the alternatives – courier companies – are not cheap,” he says.

Tuqan says that only concert ticket sites, airline websites, and portals selling niche products do well in the UAE’s online retail market, adding that physical shopping malls are the “focal point of social life” here. And Tuqan claims that worries over using credit cards online persist: “Ecommerce is still a scary thing in this part of the world – people are very wary of using their credit cards online,” he says.

Kajsa Dokakis, Managing Director of QuickDubai.com, acknowledges that the size of online shopping sites in the UAE mean that they are not yet able to offer the kind of discounts available elsewhere. “We try to be the same price as retail [stores], but sometimes we go above that. Because we’re not buying wholesale, we can’t make the kind of discounts that Amazon offers,” she says.



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3 Comments

  1. Didier Picard on January 16, 2010 7:51 am

    Dear Ben,
    Congratulation on your article. I would like to bring another perspective, if I may. We are preparing the launch in February of http://www.fashionation.me, the first online, by-invitation only shopping club in the Middle East. Our site wil enable its members to have access to luxury and lifestyle brands at prices up to 70% off retail. Fashionation.me is established in the Middle East and sources excess inventories directly from the brands and their official representatives in the region. Such operation must be very lean to be competitive and propose attractive prices to the members. It is interesting to note that the limited number of banks authorised to receive online payments from credit cards in the UAE (only 3 local banks have received approval) does not seem to encourage the implementation of effective fraud procedures, and does not give these banks a strong incentive to really compete. As a consequence, a customer will on average pay twice as much for a credit card transaction as he would in Europe or US, without getting the level of protection one would expect.
    Best regards
    Didier Picard
    Managing Director
    Fashionation.me

     
  2. NK on January 19, 2010 8:23 am

    Hi Ben,
    Indeed a very well written article.. i follow most of your articles whether its kipp report or any of your publications.. somehow i beg to differ on this article there are other sites which do give clients a more competitive price than the market; as well better delivery service… I recently shopped for a Blackberry phone on http://www.ALshop.com and must say their prices were good as well a very good serivce.. I had my phone in 35 minutes after placing the order… I was very damn impressed and when compared prices with other sites or even retailers realised i paid 30% lesser with out the hassle of parking, salik, queues…. you should have a look at the site as well… worth mentioning.. infact i also compared it to the sites you have mentioned again they get my vote..
    Re the cost of products being cheaper in west you have to even see the consumption ratio.. ipods sold in UAE doesnt even contribute to 2% of the sales in the west.. hence the price even from retailers are the same…. apart from that this market still has to see major online buying for prices to go on par with other shopping portals…
    Once again great job…
    N

     
  3. LL on January 15, 2011 9:42 am

    Hi Ben,

    While I agree that COD is popular here across The UAE I also agree with NK that there are sites that give local customers a very competative price within this market as well as an exceptional delivery service.
    Luxe Little – http://www.luxelittle.com offers baby products to parents in the Middle East – many items are at the same price as they are in the USA.

     

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