The future of e-commerce will be hyperlocal says CEO of noon
The future of e-commerce will be hyperlocal according to noon CEO Faraz Khalid, who said he spent up to 80 per cent of his time last year working on noon’s hyperlocal offerings, in a webinar hosted by Wamda and the Legatum Center at MIT to mark the launch of a joint whitepaper on the sector.
Khalid highlighted the need for e-commerce companies to start localising experiences to different markets needs, in order to fulfill their customer’s wishes and remain relevant and sustainable moving into a post Covid-19 world.
“There is the convergence of hyperlocalisation and e-commerce,” he says. “As e-commerce grows, the local supply context becomes more relevant, people start shopping for things that you can't fly in a package from across the world. So [they] actually have to be very focused on local markets and to have an understanding of the local demand context and bill for that,” he said.
During the pandemic, noon doubled down on the localisation to speed up delivery times and launched several new services including NowNow, an e-grocery marketplace that promises to deliver in under an hour for just Dh3. Asked about the sustainability of such a model, Khalid said “you have to commit to living in the future, we have to start somewhere”.
Providing customers with fast-delivery, localised services will eventually become profitable, as is the case in places like Indonesia and South Korea according to Khalid.
“We really believe that’s where the future is going to go,” he said.
Prior to the pandemic, the vast majority of the Middle East and North Africa’s (Mena) e-commerce transactions were cross-border, but as countries began to close off their borders with the onset of the pandemic, demand for local suppliers grew which helped push the hyperlocalisation trend.
But for Mona Ataya, founder of Mumzworld, the fall in cross-border trade posed a pressing challenge for her platform.
“At one point, the supply chain came to an immediate halt. So suppliers were not able to import products, smaller suppliers that had limited cash flow and were shutting down,” she said. “We had to be adaptable and flexible as the ecosystem was learning with this uncertainty.”
Mumzworld responded by “reinventing” the way it operated, prioritising certain customer orders, establishing its own fleet of delivery drivers to fulfil orders in 48 hours. In fact the entire industry was forced to reassess, alter and modify its processes. Consumer behaviours and shopping habits also changed, most notably in the payments space with cash on delivery waning.
According to Mohamed Okasha, co-founder of Fawry and CEO of fintech-focused venture firm Disruptech, retailers were forced to play catch-up to the current digital transformation and one impact has been the rise in investment financial technology (fintech).
“The pandmeic pushed people to digital payments...one of the things that’s happening is the massive investment...from different stakeholders.The number of cards and number of [digital] wallets that have been issued in the past year have been massively higher than before,” he said.
But it’s not just the consumer digital payments space and innovations like buy now pay later that has thrived according to Okasha, the B2B fintech space is also set to boom and startups in the supply chain financing (SCF) space are likely to attract the same level of attention from investors as the consumer financing products.
Too often the Middle East’s investment community has been criticised for investing too heavily in e-commerce and other business-to-consumer, consumption-focused startups, but Fadi Ghandour, executive chairman at Wamda, argued that e-commerce itself is an ecosystem for innovation.
“You start with e-commerce and all sorts of technology pops up with it,” he said. “I's not only about people going and looking at the website, or an app and buying something. There is a lot of technology that goes in there. There's a lot of data that goes into it. There's a lot of analytics, a lot of AI and then payments and then last mile. We need to think of it from the angle of the region moving, from only offline to online-offline, and creating a whole set of new jobs.”
Ensuring the continued growth of the sector requires governments and regulators to remove the “primary barriers” including the softening of borders to create unified markets and removing “artificial restrictions”, said Shari Loessberg of the MIT Sloan School of Management.
“The incumbents really have to lead the way...building the infrastructure necessary to be able to power what will happen, not just today or next year, but in the short and medium term going forward,” she added.