Last March, Sheikh Mohammed promised to transform Dubai into a ‘Smart City’, and at Payfort we were eager to see how that pledge would make life easier for companies and consumers in the digital space, and we are starting to see the benefits materialize with a new digital service called Makani that will simplify the emirate’s confusing address structure.
This new program will spur on ecommerce and make it easier for companies and consumers to transact online by smoothing out the often tricky issue of delivery. Soon ecommerce companies won’t worry about delivering products to addresses that don’t exist or that read ‘Building 4, Sheikh Zayed Road’.
Makani works by giving each building a numeric code that users can then map to through the app. We found the Payfort offices on Makani without a problem.
At Payfort we think this will provide a small but significant boost to the ecommerce sector here in the UAE.
Increased margins for ecommerce players
Many ecommerce companies deal with razor thin or even negative margins, especially as they grapple with logistical and organizational challenges in their early years.
Delivery of goods purchased online can be expensive and, depending upon the product, delivery can account for 2-5% of an item’s basket value. Makani won’t eliminate this, but it will allow Dubai based courier companies to complete orders more efficiently and hopefully at a lower cost.
Fewer incomplete orders
In the Arab world an order isn’t complete until it’s delivered and you have the cash in your bank account. Many of our clients struggle with orders that never convert due to loss of client interest, the challenges of cash on delivery, or items that are returned due to undeliverable addresses.
Makani can’t solve all of these problems, but it can increase the amount of successful deliveries and transactions.
Bringing the address-less into ecommerce
Consumers without a valid delivery address find it much harder to participate in ecommerce, especially if they can’t send packages to their place of work.
Makani means that everyone will have an address, knocking down at least one barrier for entry of the ecommerce space.
It’s no secret that the ecommerce sector is confronted by many challenges here in the Middle East. Old legislation, low credit card adoption and distrust of ecommerce sometimes prevents users from buying online.
The region’s inconsistent address system is a small problem that compounds all of these existing challenges and the Dubai Municipality should be applauded for helping ecommerce in this small but important way.
Developments like this one and the recent ecommerce law in Saudi are crucial milestones on the road to a true digital economy.
We need government, consumers and enterprise working together to overcome the barriers ecommerce companies face in the Middle East.