New ecom portals tweak business model [Gulf News (United Arab Emirates)]
(Gulf News (United Arab Emirates) Via Acquire Media NewsEdge) Dubai: Rather than compete head-on with brick-and-mortar retailers on pricing, local e-commerce portals are trying to find value from partnering them where they can. This could be the best available route to create win-win situations beneficial to both parties, industry source say.
It is certainly the tack newly launched Tejuri.com is taking. "We act as an extension of brick-and-mortar outlets and with the steady movement towards online shopping, help UAE's biggest brands build their online consumer base," Mohammad Sharaf, chairman of Tejuri.com, said. "As such, we offer prices on par with what is available in store and offer product ranges that the retailer wants to promote."
For instance, Tejuri.com which brands itself a â€˜virtual mall' had offers for the new Sony Xperia Z through Jumbo Electronics, while another tie-in had Grand Optics lining up a 20 per cent discount on all products bought through the portal.
Such campaigns are in stark contrast to the business model e-commerce portals have followed, here and elsewhere. Their USP has traditionally been to offer price advantages to the buyer vis-Ã -vis the physical retailer. Where a portal has been able to generate sufficient volumes and shopper traction, the business has invariably thrived. But fighting on prices alone need not guarantee success and a constant squeeze on margins could eventually prove fatal.
It remains to be seen how the Tejuri.com model will pan out. Ahead of the launch, it did a study with Nielson, which found that as much as $2 billion worth of online shopping orders were being placed by local e-shoppers with portals operating outside of the UAE. This is "resulting in revenue leakage", Sharaf said.
"Our online mall enables retailers registered with Dubai's Department of Economic Development to set-up their online stores and start selling their products with minimal efforts from their side; hence supporting their network of current stores with an additional channel for revenue."
No one can deny the strides that online shopping has been making in the local and regional marketplace. According to a Mastercard survey from two years ago, 42 per cent of UAE shoppers had accessed the web at some point to make an online purchase. Their numbers would have only swelled last year, in large part driven by the tablet and smartphone sales explosion.
"With the fast moving consumer electronics industry, it is becoming important to own an online trading space which benefits consumers in every possible way," said Neelesh Bhatnagar, CEO of Emax, the tech retailer which is part of the Landmark group. The Group recently took a dip in the online space through www.lmgshops.com, which targets consumers of Emax, Babyshop and Splash.
"In a region which thrives on retail shopping and with online portals springing up every other day, it becomes difficult to sustain an e-commerce portal in a short frame of time. The business model is [still] new to the region.
"The Emax portal is a part of the Landmark online shopping platform although, launching a portal in this region is a considerable investment, we do expect a breakeven period between 12-24 months."
That sort of timeframe is good going in the web business, as any e-portal operator would have you know.
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