Is the Middle East ready for omnichannel shopping?
Omnichannel retail has been gaining steam in international markets, with major brands such as Disney, Virgin Atlantic, and others providing customers with a seamless experience.
In the GCC, however, things have been more muted. In fact, even e-commerce itself has not made as big a breakthrough in the region yet as it has in international markets.
Even though internet penetration has reached a whopping 91% (according to GMI data) in a country like Saudi Arabia, only 29% of Middle East consumers shop online every month, according to 2017 Go-Gulf information. Compare that with the 87% of U.K. consumers who had purchased at least one item per month, and you get an idea of the slow progress e-commerce is making in the region. This UK figure was recorded by Eurostat two years ago, back in 2016.
With Middle East e-commerce lagging so far behind the rest of the world, does omnichannel retail even have a chance at breaking through to customers?
What is an omnichannel strategy?
“All omni-channel experiences will use multiple channels, but not all multi-channel experiences are omni-channel,” Aaron Agius writes in a blog for Hubspot.
The definition above encapsulates the essence of the omnichannel strategy. Omnichannel retail is when a company utilizes several channels, be they digital or physical, to facilitate the sale of a service or product.
A hypothetical example would be having the latest model of a certain branded laptop, say one by Dell. An omnichannel experience would allow you to purchase this laptop from several POS’s, be it the brick and mortar store, a social media post, or Dell’s app. A company has to make sure several channels are available for the customer to make an informed decision, and essentially make the purchase available at all times.
A multichannel strategy is different. “You can have amazing mobile marketing, engaging social media campaigns, and a well-designed website. But if they don’t work together, it’s not omni-channel,” Agius writes.
Omnichannel retail, again, ensures that the customer can purchase the product on all platforms that the company operates on.
The Middle East is not omnichannel-friendly, but it can be
Several factors in the Middle East, be they related to infrastructure or to consumer perceptions, have contributed to an economic environment that is not optimal for neither e-commerce nor omnichannel retail.
Many countries in the region don’t have postcodes, which often hinders delivery efforts. Many don’t have a postal service either.
Another major obstacle is consumers’ lack of trust in online payment methods. In fact, when shopping online, 67% of customers in Saudi Arabia and 58% in the UAE opted for cash on delivery, according to 2016 data by US consulting firm A.T. Kearney.
These fears are not unfounded: A February 2018 report from the Center for Strategic and International Studies and McAfee reported that the UAE is the second most targeted country in the world for cybercrime, costing the Emirate an estimated $1.4bn per year.
ZDNet reports that an Internet Security Threat Report released in March by Symantec listed Saudi Arabia as the country with the highest email spam rate, 69.9%, in 2017.
Another reason customers are opting for cash on delivery is the slow adoption of services such as PayPal. The payment service has been making slow progress in the GCC, but does not operate in a country such as Lebanon.
A major draw for Western consumers when shopping online is often the disparity in price: products online are often cheaper than ones found in brick and mortar stores, which encourages online sales. To encourage online sales, some major retailers even offer their products at a lower price on their site, such as Best Buy and Target in the US. If Arab retailers adopt this strategy, the region could see a rise in e-commerce.
When it comes to an optimized digital presence, Middle Eastern companies have been slow on the uptake. Browse online for many of your favorite brands and you’ll often discover that many of them have a meager online identity. Even when they are active on the web, they often don’t utilize an omnichannel approach, with no chance for you to purchase their products out of the store.
Some stores, such as Kuwaiti electronics retailer X-cite, have adopted an omnichannel strategy in recent years, offering their products online. X-cite, for example, also accepts PayPal, and often has online-only discounts.
Should customers bother with omnichannel in the first place?
Absolutely. Omnichannel retail makes it easier than ever to buy your favorite items. Craving the latest iPhone but can’t make it to the store on release time? Pre-book one and collect it in-store on your way back from work.
Retailers like UK’s Argo’s give you this possibility. They even have computers in-store that you can use to browse their digital catalogue.
Danny Bluestone chronicles an experience he had with omnichannel retail for UX Magazine:
“When I bought my car, I initially did a lot of online research, visited a showroom to look at models, and used my mobile to check competitor pricing while there. Post purchase, I frequently visited the manufacturer’s website and Googled infotainment software updates to fix glitches, searched social media and forums, and even called the dealer.”
As technological advancements progress in the region, and e-commerce penetration improves, we could see a surge in omnichannel retail. Then, the account above will be one experienced by most Arab consumers.