What is Shipa Delivery, and what do you do?
Shipa Delivery was started as a digital platform to tackle the last mile challenges. We build a platform to seamlessly capture the client's requirements which is; ease of choosing your time of delivery, ease of choosing your location, etc. The merchant's need, which is; us taking care of all the intelligence between where to pick the package, how to dispatch them, etc, as well as taking care ourself internally in the way we communicate with clients purely through a digital platform. We did this because people are moving to the next phase of digital adoption, and don't necessarily want to be dealing with phone calls and some of the other pain points of last mile delivery. Technologies allowed us to leapfrog the starting pains and go straight into end-to-end digital experience for the clients.
So your digital platform is integrated with the backend of the e-commerce platforms operations?
Correct. It's completely seamless.
Correct. We give a point-to-point integration with clients who have already an existing system. It takes less than a day to do API integration. Sometimes clients don't have systems, in which case, we give them an interface that they can use to upload something as simple as an Excel file and translated into information that we can use.For the consumers, we have created apps so that the individual consumer can download it and use it.
What's your area of operation? Are you only UAE based, or are you doing cross borders?
We started in Dubai citywide, and then we expanded in different cities in the UAE until we reached national coverage. Then came cross-border, and the cross-border elements for us are a mixture of having our own operations, a destination, Kuwait, for example, for obvious reasons for us, or partnerships. Today, we are able to cater to Saudi, Oman, and the whole of the GCC. Some of it you do yourself, some of it you do through partnerships. What is important for your clients is when you go to them they ask us to be their single point of contact. They don’t want to be dealing with multiple parties.
In cross border operations, you're able to make use of Agility's vast network within the region as well?
Definitely. Agility helps us with a whole set of infrastructure, be it from physical warehouses, be it from the knowledge of customs and clearance processes as well as, some cross-pollination of customers when the case may be that they have a traditional presence and want to launch an e-commerce online presence.
Who would your main target market be? Is it the the UAE-based e-commerce companies, or is it also foreign e-commerce companies that want to sell in the UAE?
The spectrum is fairly broad. The ideal client is a client for whom you really solve the problem, or you help him venture into this industry in the first place. That could be for a domestic requirement, somebody launching an online platform on top of their physical retail, or somebody wanted to launch same-day delivery or even on-demand, similar to Uber-like products. There is a lot of that domestically. When it comes to e-commerce, the region being highly driven by imports, cross border is a very important element. We have a lot of clients who are domestically based but, they source their products from everywhere, from China, from the US, from Europe. So cross-border operations are going to keep growing, I think both domestic and cross-border, when it comes to last mile, are seeing some very healthy growth.
With the products that are already being stored here in a central hub in Dubai, what kind of lead times do you offer for delivery nationally in the UAE?
We offer different services, which are next day. The slowest across the UAE is next-day delivery. Same day is a very popular product. It was how we initially launched and how we initially gained traction and recognition from our clients. Increasingly, in many cases what we call the on-demand, which is like your food delivery, but equivalent for e-commerce is also popular. It is driven by our clients, customers who are trying to equate the e-commerce experience with the traditional retail experience. So the standard was set years ago by the likes of Amazon for a two-day delivery. I think today the standard is increasingly becoming a same-day delivery.
That on-demand option that you mentioned, is that something that you are offering in the UAE?
What does that mean exactly?
It's a 60-minute delivery. For example, it could be a SIM card. You've ordered a SIM card or a phone, and you get it within 60 minutes, it could be medicine that you order from the pharmacy, it could be your credit card. We have all kinds of products that are actually increasingly being requested on-demand basis.
How is what you are doing enhancing the e-commerce logistics in the UAE or sort of greying the ecosystem for e-commerce?
I think if you think about e-commerce, the natural growth of e-commerce is driven by convenience, and we support e-commerce logistics in that convenience element. More importantly, for our clients who are our merchants, the fastest you can deliver, the lower the return rate. You have to bear in mind that this region is highly driven by what we call COD, cash on delivery. So the client hasn't committed to make the purchase until he receives it. So the fastest you get it to him, the lowest are the chances of him changing his mind or returning it once he receives it. We see really evidence of that virtual cycle.
So you offer COD on all of your deliveries?
Yes, this is driven by the clients' demand. Our clients, being the merchants, would like to see more and more credit card payments and less and less COD, but it's the reality of the market, COD. You cannot ignore it. It's such a big component that most of our merchants start with pure credit card, but then quickly join the fold and offer COD.
Shipa Delivery was launched sort of around two years ago. How has the growth been over the last two years?
The demand is very strong. More and more industries are being pushed into delivering to customers. They tend to be spoiled. Once you get the experience on the passenger side, and once you get the experience on the food side, now the next frontier is your purchases. So the demand is strong, but it's a complex process to put in place. There are a lot of variables. Payment is one variable. Obviously, what happens on the ground is a lot of value. That interaction with the clients at the door has a lot of variability to it. So it's really a matter of accompanying the clients through this. It's a learning curve for us as much as it is for them. So the demand is very strong. The growth is there. It's just a matter of taking the time to make sure you do a good job and not try to run before you can walk.
What is your outlook for the e-commerce sector going forward over the course of 2019?
I think the industry would agree that it's the fastest growing industry here especially driven by like I said, the long tail of small and medium enterprises for whom it became frictionless to sell. Now, the friction is still there for physical delivery, but putting a post and start selling any product has really become trivial using any social media platform. The challenges will be to keep those timelines in check, being competitive from a price perspective, particularly because we see a lot of merchandise price very competitively, whether it's from China or somewhere else, so the logistics costs cannot exceed a certain percentage.
But even that, we've seen traditionally about 11% to 12% is the logistics costs associated with a seller product. Now companies allocate a higher percentage of that. The same product can exist on multiple platforms. What's going to make the difference? The one who can deliver it fastest is the one that's going to end up making that sale.You mentioned the actual ordering of the product since that one line has become frictionless. How do you intend to make the last mile more frictionless and faster, even faster going forward?
When I say last mile, I'm actually thinking about further down the chain, we are just one piece of it. Frictionless, meaning really the ability to integrate seamlessly into your partner. So there's the first mile element, there's the middle mile, there's a customs clearance process usually, there's an element of warehousing sometimes, and then the last mile. So the ability to talk the same language is very important. Technology helps a lot in that aspect. Maybe new technologies like blockchain can make that even more frictionless.The key is, one, the ability to have seamless information and, two, the ability to scale and that's usually driven by the business model. Like I said, you have to be able to work through peaks. E-commerce is an industry that is known for its peaks. Peaks are manageable as long as you have enough information ahead of time to be able to wrap up and down.