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Expert Collections containing Fodel
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Fodel is included in 2 Expert Collections, including New Retail Formats.
New Retail Formats
Tech-enabled, physical retail selling formats that reach beyond the walls of a traditional store.
Supply Chain & Logistics Tech
Companies offering technology-driven solutions that serve the supply chain & logistics space (e.g. shipping, inventory mgmt, last mile, trucking).
Latest Fodel News
Feb 20, 2021
0 Comments Get daily business news from the region delivered straight to your inbox I agree to the terms and conditions SIGN UP In the wake of the Covid-19 pandemic, e-commerce has risen as a natural winner by Zainab Mansoor E-commerce arrived. The year 2020 was more than just the closing of a decade; it was an inflection point for individuals, businesses, and economies around the globe. The arrival and spread of the Covid-19 virus slowed several industries, upended the supply-demand balance, and caused many to rethink their strategies for survival and mitigation. On the other hand, the pandemic also piloted innovation, rejuvenated several sectors, and marshalled the growth and adoption of digital solutions and channels that fell in step with virus containment measures across the globe, helping curate the ‘new’ ecosystem. In the days and weeks following the outbreak of the pandemic, consumers and businesses pivoted towards technology, albeit for different reasons: The latter resorted to digitalisation to retain customers, capture market share, and emerge gainfully on the other side of the crisis. The former, meanwhile, ventured online to shop, learn and work. E-commerce, having deep interests on both sides, rose as a natural winner. “The Covid-19 was a good booster for e-commerce players because it taught them that in case of a huge surge in business, how were [areas such as] operations and customer service going to handle it. It’s almost like a steroid shot to the e-commerce industry because all of a sudden, everybody had to use it,” opines Rashid Mohamed Alabbar, board member at UAE-based Barakat. “Anybody who was able to capitalise during Covid to give a good experience to customers in terms of delivery, in terms of the quality of the product, obviously will have an amazing advantage because you are going to be increasing your loyal customer base.” Taarek Hinedi, vice president of FedEx Express Middle East and Africa operations, expands on it: “While e-commerce has long been a popular method of shopping across the Middle East, during the Covid-19 pandemic it has grown to become the retail option of choice. Both consumers and retailers have shifted their focus to safer and more effective ways to keep commerce moving in a challenging environment. “Looking at recent consumer behaviour and spending habits, many companies are now strengthening their online presence and using e-commerce to make their products and services more accessible. In the first five months of 2020, the UAE saw a 300 per cent increase in demand for e-commerce services among consumers. In May 2020 alone, e-commerce represented the highest number of licences issued to any business sector.” If history is a precedent, the sector’s growth trajectory is, in many ways, expected. From a mere $5.3bn in 2015, rising to $17.7bn in 2019, the GCC’s e-commerce market is expected to become an almost $50bn market by 2025, a report by Kearney Middle East notes. Two salient factors will drive this growth: more, newer and digital-savvy shoppers – millennials account for more than 45 per cent of the user base, which is growing at 6 per cent CAGR; and more growth in key segments – online food delivery and grocery are expected to grow by 30 per cent each year until 2025, while fashion and beauty is forecast to experience annual growth of 18 per cent over the same period, the report suggests. Test of resilience E-commerce, similar to the technology underpinning it, has gone through several layers of disruption. But the pandemic arguably made the most compelling case for its evolution and usage, promising convenience, safety and efficiency all bundled in one offering. A Mastercard study revealed that nearly three out of four UAE consumers (73 per cent) are shopping more online than they did prior to the pandemic, with FMCG (fast-moving consumer goods), healthcare, apparel and banking seizing the highest spike in online activity. Social media too played a fair role in engaging consumers online as 72 per cent and 56 per cent of respondents discovered new sellers through Facebook and Instagram respectively, the survey confirmed. This tide, in the face of growing digital comforts, is set to gather further momentum and extend gains across the region. “Our model shows that there will be a larger acceleration in e-commerce between 2020 and 2022, at 20 per cent CAGR, and a gradual growth at 14 per cent until 2025. Without Covid-19, the same growth was projected at 14 and 10 per cent, respectively. For businesses with a physical footprint, this could mean bumps in the road as current trends show a significant drop in store sales versus 2019, while online sales have tripled or even quadrupled,” the Kearney report expounds. However, despite the impetus it provided, the Covid-19 pandemic proved to be a litmus test for various operators – for retailers, it tested their resilience to survive the shift from offline to online, ramp up or launch their digital presence or collaborate with existing marketplaces to push products through digital channels. For e-commerce players, it tested their resilience to handle the surge in online traffic, customer orders, and last-mile challenges to ultimately engage and retain the end-user for healthy bottom lines in a challenging economic climate. “This past year has been a challenge for all businesses, ours included. In early 2020, we accelerated the development of noon Daily, our dedicated grocery platform, and nownow, our on-demand app. Both products were in the pipeline for much later launch dates but, due to the changing needs of consumers, we launched both during the lockdown in April and May. In addition, 2020’s Yellow Friday sale was our largest yet,” says Maya El Ayach, SVP, Growth and Digital Strategy at noon. “Over the past nine months adoption of e-commerce in the region accelerated, trust increased, and overall reliance on a more digital lifestyle grew. We watched as noon became a utility that people relied upon for the safe delivery of essentials, groceries, and so much more. Noon was created to give people in the Middle East a local digital champion, a platform through which businesses can expand their offering online. We believe the love for e-commerce will only get stronger and that we’ll see more local SMEs and businesses joining noon to reach digital audiences.” As the world queues up to receive the Covid-19 vaccine in a wider attempt to contain the infection and return to life as we knew it prior to the pandemic, a far sterner test for retailers awaits amid what is expected to be a competitive landscape. As e-commerce gains further ground and a sizeable contingent of consumers transition from offline to online, traditional retail brands will face the heat as physical stores struggle to stay relevant and feel burdened by costs of operating omnichannel approaches. “We believe there is room for both brick-and-mortar and online shopping moving forward. Focus must be placed on creating a more seamless and enjoyable shopping experience for the customer – be that online, in-person or omnichannel,” suggests noon’s El Ayach. Immune to failure? The sheer rockface of competition with a growing number of operators vying for the same consumer basket and the precarious path to securing investment all come together to form a potentially challenging concoction for new and existing e-commerce companies. Mohammed Dhedhi, principal at Consumer Industries and Retail Practice at Kearney Middle East explains: “The Middle East is now a key battleground for regional and global e-commerce players, each of whom are fighting to stamp their dominance and capture market share. Global experience shows that e-commerce winners are few and need deep pockets as players are competing on price, marketing spend and delivery, and losing significant money in doing so. In the region, smaller businesses struggled to compete across all of these areas as players with deeper pockets were able to spend their way into share.” Several online platforms shut shop last year, as the economic downturn battered businesses and eroded bottom lines. In H2 2020, UAE-based online marketplace Sprii went into liquidation, while local e-commerce portal Awok ended its operations a year after closing a $30m funding round. Online fashion platforms Nisnass and The Modist too shut shop last year. To boost chances of churning out a profit, companies must stay alert to three stumbling blocks: inefficiencies in the supply chain, changing consumer behaviour and an excessive focus on boosting demand through marketing and promotions, the Kearney report suggests. “While offering discounts, holding large sale events, and investing in online ads can increase customer numbers, we found that it can also inadvertently add 3 to 5 per cent to selling, general, and administrative expenses (SG&A). With the same customers often chasing bargains, and firms continuing to offer free delivery on low-ticket items, this also bumps up fulfillment costs. Taking both scenarios into account, businesses can easily slash their own profits by up to 5 to 10 per cent or even go into the red,” the report reads. DeVere Forster, COO, Dubai CommerCity also identified other challenges that new e-commerce businesses must watch out for: “How to differentiate oneself given the saturation of e-commerce; how to localise brands to deal with consumers on a local/regional level as opposed to being a ‘one size fits all’ brand; and how to identify and promote to the right target audience to ensure the right lead generation.” Winning the last-mile There is now a growing consensus that the Covid-19 pandemic has etched a profound change on consumer behaviour, and that online shopping will account for a sizeable portion of the shopper’s basket size moving forward. Hence, there is no better time for online retailers and logistics partners to course correct and align their last-mile strategies. “Consumers are more demanding with e-commerce becoming more prevalent. The advent of same-day, next-day delivery along with multiple payment options at a consumer’s disposal such as COD, CCOD, payment plans, ‘buy now pay later’ options, delivery where you want it, are all testaments to the evolving last-mile delivery in recent years,” opines Forster. With instant gratification turning into a key differentiator and next-generation technologies shaking up delivery chains, the last-mile ecosystem is expected to go through further disruption. “As e-commerce penetration increases across the region, service providers are focusing on the development of flexible delivery options which are convenient, safe and secure. Delivery chain innovations will target the development of solutions that provide seamless last-mile delivery experience to the consumers,” notes Sivan T J, senior consultant, Supply Chain and Logistics Practice at Frost & Sullivan. Solutions to overcome the challenges associated with last-mile delivery include click and collect, digital locker boxes, micro-distribution centres, and delivery automation, he adds. As disruptive technologies such as automation, AI and tracking software are adopted across delivery channels, digitalised solutions may see a larger role in the regional e-commerce ecosystem as operators seek to streamline shipments in the last leg, while optimising resources and achieving greater viability. “Inventory management and optimisation, route navigation and scheduling, parcel tracking, condition monitoring, and delivery automation are some of the areas with potential for digitalisation. Autonomous transportation, supply chain automation supported by big data analytics, artificial intelligence, wearables, predictive inventory optimisation and warehouse automation are likely to be adopted by service providers. The use of autonomous driverless vehicles, electric vans and drones is also expected to gain prominence for delivery of e-commerce related parcels,” explains Sivan T J. E-commerce companies have already warmed up to the new technologies and are adopting alternative and optimised solutions, while logistics providers and startups are seeking innovative delivery methodologies. “To increase convenience for our customers, we have deployed hundreds of noon Collect lockers across the UAE and Saudi Arabia. In Dubai, we launched our autonomous vehicles, driverless vans using AI technology, stocked with F&B essentials for on-the-go consumption. We have also been working closely with our retail partners to incorporate a better collection network including drop shipping and more localised processing hubs. Getting orders from our retail partners to our customers as smoothly, accurately, and swiftly as possible is a top priority. Which is why we’re also testing drone deliveries for future last-mile developments,” observes noon’s El Ayach. Similarly, in a bid to optimise delivery, UAE tech startup Fodel offers a network of pick-up locations as an alternative to home delivery. Transforming local merchants into pickup points, Fodel is enabling online consumers to collect their parcels from a place and at a time most convenient to them. “Delivery is the most stressful part of the online shopping experience. Customers have to change their schedule to be home to wait for the parcel, they usually get multiple calls from the drivers asking for directions and in the worst cases, they miss their delivery and it gets postponed to another day,” opines Soumia Benturquia, CEO and founder of Fodel. “Fodel puts an end to the uncertainty associated with last-mile delivery in the GCC by making the process simple and convenient. Customers purchasing online can now select a store nearby like a grocery, pharmacy, laundry, or a gas station. Their products get delivered there and they can then pick them up at their convenience.” Fodel is the region’s first last-mile delivery service based on the pick-up and drop-off (PUDO) model, the CEO says. Its network currently consists of more than 2,000 merchants across Saudi Arabia, the UAE, Bahrain, Kuwait and Oman. “Our solution is unique in the GCC region but it’s a proven and well-established business model with many successes around the world, including Kiala in the UK with more than 7,000 locations, or Cainiao in China with over 40,000 locations. In many countries, the majority of deliveries happen via the PUDO model. In the Nordics for example, more than 70 per cent of all deliveries happen via pick up and drop off locations,” notes Benturquia. Delivering en masse to one location ticks several boxes – parcels are delivered to a single place already frequented by customers, while the host partner receives increased footfall which would lead to potentially incremental revenue. It also grants service providers and e-commerce companies the bandwidth to handle increased orders during peak times without compromising customer service. “Fodel’s scalable solution helps improve logistics bandwidth at all times, and especially during peak seasons such as Ramadan and other festive seasons when logistics partners get overwhelmed with demand. In that regard, our solution can multiply the capacity of an e-commerce or a logistics partner. On top of solving this problem, the supply chain also benefits from the significant reduction in return to origin (RTO) deliveries, an issue for shippers and e-tailers which is especially poignant in the GCC markets where last-mile delivery failure rates are high,” adds Benturquia. Best mix Since several factors such as convenience and sustainability come into play, different delivery models may work best according to the layout and requirement of each market. On-demand services may propel home delivery and delay the adoption of peripheral business models in some locations, while in others, providers may be compelled to widely offer pick-up services and collection points. Alternatively, a combination of delivery solutions may work in concert, drawing on their individual strengths to best serve the diversified needs of consumers. Given the GCC’s e-commerce ecosystem, which solutions are best suited to this region? “Home delivery services will continue to stay due to the increase in demand of online grocery and food products,” Frost & Sullivan’s Sivan T J says, adding, “With advances in technologies such as delivery bots and drones, cost of home delivery services is expected to decline significantly. Further, as the digital infrastructure improves, localised delivery networks will play an important role in the last-mile delivery chain. This will favour the adoption of delivery solutions supported by digital locker boxes and micro-distribution centres. In summary, a combination of home delivery solutions and collection points are more suitable for the GCC region.” Tags
Fodel Frequently Asked Questions (FAQ)
When was Fodel founded?
Fodel was founded in 2018.
Where is Fodel's headquarters?
Fodel's headquarters is located at Dubai.
What is Fodel's latest funding round?
Fodel's latest funding round is Series A.
How much did Fodel raise?
Fodel raised a total of $2.6M.
Who are the investors of Fodel?
Investors of Fodel include Dubai Cultiv8, Hamdi Osman and Al Rajhi.
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