UAE consumers need to understand the value of delivery services

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Consumers need to be made aware of the value of delivery and might already be willing to pay more, according to logistics experts at Seamless Middle East in Dubai.

Shoppers have begun to expect increasingly speedy delivery due to their reliance on e-commerce during pandemic shutdowns, the conference session heard, but panelists questioned the sustainability of both free shipping and the super-fast delivery q-commerce model.

Emirates Post CEO Peter Somers remarked that he wishes retailers had never offered free delivery. He said free shipping started in the early days of e-commerce over 20 years ago, leading consumers to believe that all shipping should be free.

“They demolished the value of delivery big time,” he said. He advised retailers to “explain to customers the value of logistics”.

Somers added, “At the end of the day, it’s the driver, certainly in e-commerce, who is the only physical contact between our customers and consumers. If you don’t pay and take care of your staff, the service will be lousy.

He also noted that the quick-trade or q-trade model of trying to deliver products in 15 minutes may not be sustainable in the future. “The question is, overall, is this model sustainable, and what will they change?”

Going forward, consumers can expect to see the CO2 emissions generated by their delivery alongside the price when buying online, he said, with emissions correspondingly higher than the parcel. should be delivered quickly.

Jonathan Savoir, co-founder and CEO of supply chain delivery platform Quincus, said the pandemic has led people to expect faster deliveries due to reliance on e-commerce and delivery during closings. “Before the pandemic, we were fine with five-day deliveries; now it’s awful. [Next-day delivery] that’s what we expect.

“It’s imperative that logistics companies start looking and watching this journey,” he said, adding that companies should ask themselves the questions “how do we digitize, how do we create visibilities for end customers and how do we optimize all the data flowing through it to start developing that operational efficiency?”

The panel also looked at the recent controversy around the pay and conditions of food delivery drivers in Dubai, who walked out in protest earlier this month. Ashish Panjabi, chief operating officer of Jacky’s Group of Companies, which includes Jacky’s Electronics and Jacky’s Retail, both of which offer online consumer goods delivery, highlighted social media support for drivers delivering food to restaurants. .

Noting that consumers had been “insurgent” on social media in support of delivery drivers Talabat and Deliveroo who quit over wages and conditions in the face of rising fuel and living costs, Panjabi remarked: “Are we able to gain a little more value from the customer? Or are we actually giving it all away for free? »

The UAE government announced last night that fuel costs will rise for June, topping AED 4 per liter for standard Special 95 petrol.

Delivery costs will no doubt have to increase, said Sandeep Ganediwalla, partner, Redseer Consulting, in a separate conversation with Zawya, but the question remains whether consumers will accept the cost being passed on to them.

Restaurants still view delivery as additional revenue with additional costs, he said, and they will need to take a holistic view of their costs and revenue generation, which will also include the ideal size of operations, costs marketing, localization costs and, of course, drivers.

“Drivers add significant value to their businesses and of course they want their fair share,” he said, comparing the situation to when credit cards were first introduced and when companies would charge consumers an additional fee to help them with the cost of accepting them.

“However, once credit cards grew, they were considered a cost of doing business and included in overall costs rather than being passed on,” he said. “Somewhere between these two extremes [lies] a solution, and it will be different depending on how important commercial delivery is to the restaurant. »

(Reporting by Imogen Lillywhite; editing by Seban Scaria)

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