Free shipping could be the next big thing to sweep the UAE’s e-commerce space, with Souq.com already running a targeted promotion and others likely to follow suit. In the intensely competitive world of online selling, sacrificing shipping charges means portals stand a far better chance of winning over new marketshare.
According to a spokesperson for Souq.com, no decision has been taken on whether the free shipping service will run only for a select period. To avail of this, the shopper must make a minimum purchase of Dh150 per transaction on products participating in the “Fulfilled by Souq” campaign.
In Souq.com’s case, it is clearly the intent to draw in new shoppers. Plus, there could be other tangible benefits. This raises the stakes for any future e-commerce entrant, who might now be forced to launch operations by offering delivery free, even on a select basis, for shoppers.
“So far it’s always on and we don’t have an end date. Shipping cost is one of the barriers for some users and we worked on eliminating this,” the spokesperson said.
The brands participating directly in the Souq promotion include the likes of Samsung and Lenovo in the tech gadget category, and L’Oreal Paris, Maybelline New York and Marina Home in lifestyle. In the fashion range, Nike, Guess, Koton and New Look are among those to have signed on.
“We are still extending this promotion in the UAE, Saudi Arabia and Egypt and Souq currently handles most of our last mile deliveries,” the spokesperson added.
In the e-commerce space, deciding to offer delivery for free will not be a decision taken in a hurry. They represent a fairly sizeable cost depending on which product is being shipped.
Typically, these range between 5 and 10 per cent of the overall cost, and sometimes depending on the scale of operations and average ticket size even higher, said Ali Haji, head of digital operations at GCP Group, which operates DubaiBazaar.com.
“Clearly, this is not an insignificant cost, and giving the customer this promotion exerts pressure on the bottomline of marketplace sites.”
Haji’s mention of membership scheme is quite relevant. Amazon in the US has built a substantial enough base for its Prime membership, which for a $99 annual fee entitles members to free two-day delivery.
And, these days, this could be extended to accessing Amazon’s video and music streaming. And in the future, even some cool price options on groceries and much more. At some point in the future, e-commerce operators in the region will have their own versions, or with Souq, extending the Amazon programme to this part of the world as well.
But Haji says that free shipping may not be the solution for all portals. And definitely not for those online portals which are counting their every fil and dirham.