Catalyzing Online Commerce: How The COVID-19 Pandemic Has Impacted Business As We Know It
You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.
“Nothing lasts forever” has been a popular saying for a long time, but it seems that, in our current circumstances, business owners are contemplating its truth more strongly than ever before. After all, the global COVID-19 pandemic seems to have changed the face of commerce, with the recently released COVID-19 CEMEA Impact Tracker by Visa, which surveyed merchants and consumers throughout the CEMEA region, showing that the crisis has absolutely altered the way customers interact with businesses today.
The survey stated that the impact of the pandemic on merchant revenues and profits has been high in all regions, with merchants in the Kingdom of Saudi Arabia being hit the worst, and South African retailers being only slightly more resilient. When asked to assess their customers’ purchase frequency during the COVID-19 crisis, merchants across all regions reported a decrease, with the UAE and Russia seeing the highest dips at 86% and 84% respectively, and South Africa the lowest, with two-thirds (66%) of merchants recording a decrease and 27% seeing an increase in customer visits. “As we have seen in our report, merchants are understandably anxious about the future with economic uncertainty and changing shopper behavior,” noted Marcello Baricordi, Group General Manager - MENA, Visa.
It’s in response to this sentiment that throughout this crisis, and after it, Visa has been committed to helping small and micro businesses bounce back from COVID-19. “As a company that enables digital payments at more than 61 million merchant locations around the world, Visa’s priority is to help small and medium businesses thrive at every step,” Baricordi explained. “Globally, Visa is committed to digitally enable 50 million small businesses to power recovery in communities worldwide. Regionally, we’ve already launched our SME focused campaigns in the UAE and Pakistan, which are really focused on helping SMEs have the tools they need to hasten recovery.”
Marcello Baricordi, Group General Manager - MENA, Visa.
This is the reasoning behind Visa’s latest initiative, “Where You Shop Matters,” which is centered on encouraging consumers in the UAE to support the country’s small businesses. One of the facets of the campaign is Visa’s Small Business Hub, a platform that equips merchants with information toolkits for digital growth as well as resources on how to move to new digital ways of working and, eventually, aid in their business recovery. “For small businesses looking to get back on their feet, it is important to adopt and embrace new ways of working, integrate digital solutions, spruce up your e-commerce offerings while making sure the foundation of great security is in place to give consumers a great smooth, secure, and frictionless experience,” Baricordi said.
But there’s been some silver linings even amid this crisis, as noted by the co-founders of Little Majlis, an online arts and crafts marketplace based out of the UAE. “Since we launched eight years ago, our intent has been to champion locally made and make it the norm, rather than the exception,” said co-founder Anna Bolton-Riley. “These days, with border restrictions in place and a sense of the unknown prior to and during the height of the current coronavirus wave peak, both existing and new corporate clients sought out Little Majlis’ services and products, as a more reliable and manageable approach to gifting.”
Indeed, co-founder Annabelle Fitzsimmons noted that when Dubai Duty Free faced difficulties with their supply chain of products sourced from abroad in the early days of the coronavirus pandemic, it was Little Majlis to whom the retailer turned to when they wanted to stock up their shelves. Unfortunately, the restrictions around movement in Dubai and the temporary closure of Dubai Duty Free happened soon after- but Fitzsimmons still believes this to have been a win for her homegrown enterprise. “While this is a short term setback, we can’t lose sight of the fact that without the pandemic, the advantages of ‘Made in the United Arab Emirates’ may not have been so convincing, and we wouldn’t be looking forward to the world opening up again, and #MadeInUAE being promoted to a global audience at this prime retail location,” she said.
Anna Bolton-Riley and Annabelle Fitzsimmons, co-founders, Little Majlis.
Source: Little Majlis
This crisis, Fitzsimmons added, has also shown that the overall support given to the SME community in the UAE has not been diminished. “We have worked hard to build a strong base of quality repeat wholesale, retail, and corporate clients who share an aligned vision,” she explained. "In the months prior to the pandemic, we were getting more and more corporate enquiries for locally made products. We reached out to these entities during the height of the crisis, reminded them that we were open for business, and ready to service their needs. As the movement restrictions started to ease, we began collaborating on some unusual projects, including some fun ‘welcome back’ to the office gift sets. Never did we think that face masks and quirky face mask stickers would be on our product delivery list.”
Raed Hafez, CEO, elGrocer, a Dubai-based grocery marketplace platform, also reports that the COVID-19 crisis has changed how their business is perceived- for the better. “Our business is built to focus on high density populated areas, and this is how we get the best return on our investment,” Hafez said. “However, during the COVID-19 movement restriction period, our service offering was no longer driven by need for convenience, it became an essential service and a necessity. We were approached by government bodies to ensure that the continuity and increased coverage of our service. Given this new 'mission,’ we looked at expanding our network coverage to ensure that everyone has the option of ordering their groceries through elGrocer, rather than risking their health to battle the crowds in the stores. We worked with our retailers to identify the gaps, and made sure that every town had at least one retailer available to order from. Our grocery marketplace was the first and only online grocery business that covered 100% of the UAE.”
Raed Hafez, CEO, elGrocer.
Another consequence of the COVID-19 crisis is that it has brought many new shoppers online. According to Visa’s COVID-19 CEMEA Impact Tracker, two-thirds of UAE consumers (68%) and Saudi consumers (66%) and 71% of Kenyan consumers say that COVID-19 has led to their first online grocery shopping, while 70% of those surveyed in UAE and 69% in Kenya are making their first online purchases from pharmacies. Plus, this crisis has driven nearly two-thirds of consumers in the UAE (68%) and Saudi (66%) to do their shopping online for the first time.
Another study showed why the UAE has been so well-equipped to handle this increased demand. A recent analysis by the Dubai Chamber of Commerce and Industry based off latest data from Euromonitor showed that the UAE's e-commerce sector has been comparatively more successful than in more than 38 other advanced and emerging market economies. Comparing the percentage of goods that are not in stock, levels of inventory for their major e-commerce platforms, and daily percentage of stock keeping units that were marked as “goods not available” on the retailer websites for each country, the Dubai Chamber analysis revealed that the UAE adopting supportive government initiatives, having modern infrastructure, and strengthening its evolving logistics sector have all contributed towards building a strong supply chain and addressing current e-commerce challenges effectively.
In a nod to these stats, Hafez pointed out that the future grocery shopping missions will be driven by a mix of convenience and reliability. “The customer will continue to demand top selections and variety of products and offerings,” he said. “However, the customer will also demand a high level of dependability and consistency. Their purchasing is recurring, and in order for elGrocer to earn and keep their trust, [it] requires a service level that goes well beyond providing the best pricing or promotions. Further, our target customer is no longer just the digital native. Our customers span all demographics. Our tech and service must be intuitive to all users, no matter how comfortable they are with technology and digital services. Finally, ensuring that food and grocery supplies are available to all citizens redefined our mission and highlighted the need for business continuity planning even for a startup like ours. We are now well connected with the authorities to deal with any new guidelines and regulations immediately.”
Apparently, merchants across the MENA region are following in elGrocer’s footsteps- more than a third of merchants in KSA (38%) reported that they had acquired an e-commerce platform as a direct result of COVID-19, while 93% of merchants in Ukraine and 91% of those in UAE had established their platforms before the pandemic. A majority of merchants in all markets are optimistic that consumer use of online services will grow after the pandemic ends, with this conviction particularly apparent in KSA, where 80% of merchants predict an increase in use after the COVID crisis.
However, Hafez advises all not to underestimate the work required for a business to go online. “Going online goes well beyond offering a website or an app,” he said. “It’s a complete set of activities and services that must work hand in hand seamlessly to provide a fluid and comfortable service to the customer. It’s important to partner with a professional service provider who can provide the full offering including customer acquisition, logistics, customer service and technology. Each industry got impacted differently, and the lasting effect will vary drastically from one sector to another. However, one thing is common: digital transformation is no longer a ‘nice to have.’ The business’s ability to continue offering its products and services must be consistent regardless if the customer is present physically or virtually at its premises. This must be well planned and executed across all customer touchpoints.”
Another important fact that businesses cannot avoid, Baricordi says, are contactless payments. Today, VISA reports that more than half of the transactions in the UAE are contactless, while in Saudi Arabia that figure is even higher at 89%. “Amid social distancing guidelines, there’s been a fast-growing demand for contactless payments on cards and on mobile phones, because consumers prefer the speed and convenience of it and trust its security features,” Baricordi said. “We can expect the popularity of contactless to be sustained and further increase post-pandemic. And therefore, if you are an existing business, contactless payments will play a major part in your return to business. Understanding and planning for this is especially crucial for small businesses in the region.” Furthermore, Visa’s COVID-19 CEMEA Impact Tracker showed an assumption that merchants who claim contactless will increase in preference among consumers, since contactless is gaining at the expense of cash. In Saudi Arabia, 43% of merchants said they have seen a decline in the use of cash, while 80% have witnessed a rise in contactless.
In conclusion, Baricordi advises that anyone looking to set up shop in a post COVID-19 era should bring their A-game to online business development to ensure business sustainability and longevity. “It is clearly evident that small businesses which adopted digital solutions were the ones that were able to survive and thrive during the worst of the COVID-19 lockdowns,” he said. “Integrating digital solutions at the start allows for a seamless introduction and consumer journey which is more likely to build customer loyalty. In fact, for a new small business, it is relatively easier to prioritize digital solutions across their supply chains, logistics, e-commerce, and digital payments, as they are free of the burden of legacy systems and processes.” In effect, the road ahead is clear: it’s time for all businesses to deploy a digital-first strategy.
The Executive Summary
Marcello Baricordi, Group General Manager – MENA, Visa, shares three key takeaways for merchants venturing into the e-commerce game
1. Customer experience matters “Small merchants need to look at how to enhance their online avenues/e-commerce offerings to remain popular with regular customers, and acquire new ones too.”
2. Prioritize contactless payments “Sellers that still use cash-on-delivery as the primary mode of payment need to swiftly implement a contactless consumer journey to stay in the game.”
3. Security shouldn’t be ignored “With increased reliance on digital commerce, cybercriminals have been preying on more vulnerable first-time online shoppers. And therefore, making customers feel secure online and educating them about safe payment behavior is critical to building trust in an e-commerce offering.”