Can retail shopping survive without going online?

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by Mohammed Hajjar

E-commerce puts the globe in your hands

E-commerce puts the globe in your hands

Retail has emerged as one of the fastest growing sectors in the Middle East, driven by rising affluence, changing lifestyles, and a young and increasing population. However, online retail is still a relatively subdued concept in the region.

In Saudi Arabia, online sales accounted for a mere 1% of total retail sales in 2011

Nevertheless, with demand in retail expected to remain strong in the coming decades, the sector appears the most lucrative of all e-commerce opportunities in the region. This is especially true for the Gulf Cooperation Council (GCC) region given its high internet penetration and mobile density.

Retail sales in the GCC and online (2011)

Source: Sacha Orloff Consulting Group

Source: Sacha Orloff Consulting Group

Existing trends seem to favor online retail in the Middle East, especially with the entry of a number of pure-play online retailers such as jadopado.com, groupon.ae, yallabanana.com, souq.com and markavip.com. However, pure play is not the only retail e-commerce avenue; existing ‘brick-and-mortar’ stores can also create parallel online portals, thereby grabbing a bigger share of an increasing retail pie.

Currently, electronics and fashion products dominate the online retail space in the Middle East. However, greater acceptance of online shopping and developments in e-commerce infrastructure are likely to encourage other segments (such as groceries and medicines) to go online as well. Already segments like hospitality and travel have a very strong online presence and hence there are significant opportunities to replicate success in online retail and the wider e-commerce sector.

Hospitality and travel already have a strong online presence which indicates the acceptance of customers to shop online

Percetage of people shopping online: MasterCard 2011-2012 Survey

Source: Master Card; Note the survey was conducted between 5 Decemeber 2011 to 6 January 2012 and convered 12,500 consumers from 25 markets across Asia Pacific, Middle East and Africa

Source: Master Card; Note the survey was conducted between 5 Decemeber 2011 to 6 January 2012 and convered 12,500 consumers from 25 markets across Asia Pacific, Middle East and Africa

Early entrepreneurs would definitely enjoy the first-mover advantage. However, regional firms would require the right strategies to succeed over the longer term, especially if greater liberalization of the sector attracts leading global players. Yet, the most important strategy for online retailers is to:
1. Focus on a specific niche and adapt to the its needs. Don’t try to sell for everyone; it won’t work as different customer segments have different preferences. For example, UAE-based shopping platforms such as jadopado.com, aido.com and namshi.com distinguish themselves by delivering the product the same day as opposed to the global average of three to seven days. Similarly, Mumzworld.com distinguishes in terms of product offering; it caters solely to mothers and children. In addition, the company offers an advanced comparison feature which displays key product information such as price, weight and color of up to 12 different products.

2. Develop intuitive and easy to use websites that cater to the taste and behavior of the niche market.

3. Advertise and keep track of the latest trends in popular online social media forums (like Facebook and Twitter).

4. Engage your target customers and develop a sense of one-one-one dialogue. You will be surprised how much insight they will give you about the business and their preference. This is far better than hiring a marketing consultant to develop a marketing strategy. Your clients will tell you what they are looking for, so listen to them.

Yet with all the marketing strategies and tactics, retailers must make it easy on the customer to shop and pay. In fact, given the inability to create impressive walk-through experiences, customer friendly options assume even greater importance in online retail. A user friendly website, varied and lucrative discounts, cash on delivery, and easy return policy are some factors that could enhance the shopping experience. Interestingly, a few online stores have already leveraged this opportunity. Online store markavip.com offers better bargains with an easy 21-day return policy and a cash-on-delivery system. In fact, a better payments platform is the key to not just online retail, but also e-commerce in the region in general.

Online retailers can tie up with global names such as PayPal to reassure buyers about the security of transactions.

Lastly, but importantly, the entire e-commerce experience should be supported by excellent logistics and back-end operations. In fact, customer service, including online and telephonic guidance on product policy, usage and repairs, is one of the keys to a successful retail arrangement. Without an elaborate and efficient back-end system in place, online retail is not likely to make much headway.

Online retail has just started picking up in the Middle East providing a lifetime opportunity for companies to attract new customers from neighboring countries and even international ones. Such opportunity was only a dream, to some, few years ago. Yet by focusing on the total shopping experience, purchasing value and convenience; the dream can be realized.

If you are planning to launch your online business or you are interested in learning more about this sector, please contact us and send your enquiries.

Could e-commerce explode in the Middle East

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By Mohammed Hajjar

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E-commerce in the Middle East is not as widespread as in the West or in Asia. This is ironic, given the significant Internet and mobile phone penetration in the region, high per capita income, a young population, and changing lifestyles.

With all the smart phones and the Internet access, it seems that browsing and chatting are consuming people’s time rather than content research and shopping

While a deeper analysis reveals interesting insights on issues inhibiting growth in the sector, it is nevertheless apparent that the enabling factors are strong enough to transform the region into one of the most lucrative e-commerce markets in the long term. The sector already seems to be gaining momentum, with foreign investors also seeking a share of the pie in an area that has seen economic stability and considered a safe haven for investors. At the same time, regional players are increasingly investing in capacity build-up and introducing innovations to cater to the local population.

Yet, relying on organic growth alone is not enough for the sector to achieve its full potential.

There are a number of challenges that must be addressed

… And they are myriad in nature—technical, social, economic, and regulatory. The absence of multiple, strong online transaction mechanisms is arguably the biggest irritant; online banking as a whole is a much weaker concept in the region than in key global peers. Credit cards are favored but have limited effectiveness due to low credit card penetration. Additionally, the absence of transparent, all-encompassing regulation on e-commerce inhibits both consumers and businesses from taking to online retail platforms. Moreover, there is a lack of skilled IT professionals who can design and manage online platforms.

To complicate matters further, and from a consumer behavior perspective, online shopping itself is far less preferred to face-to-face transactions. However, similar conditions existed in currently successful e-commerce markets before giving way to changing lifestyles and growing technology awareness.

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Encouragingly, current loopholes translate into opportunities for smart businesses. Online retail is no doubt the most lucrative proposition through which regional firms can leverage local knowledge for offering standardized platforms (for example, in Arabic) to their customers. There are two avenues here — existing ‘brick-and-mortar’ retailers offering the online option and pure-play online retailers (such as eBay) entering the market. For the former, the key challenge is assuring customers that the online shopping experience is similar to that of shopping at the corresponding brick-and-mortar store, while for the latter, advertising the firm’s services is critical in the initial stages.

Interestingly, a rise in online retail creates opportunities for banks and online payments firms (such as PayPal), as they try to generate more revenues from e-commerce. Furthermore, technology and logistics are likely to enjoy strong positive externalities owing to a growing e-commerce market. In fact, investments in e-commerce technology (retailers, customers, payments platform, etc.) are likely to garner strong returns given that the sector is in a nascent stage of development.

Regardless of what happens, one thing for certain exists in this part of the world: historically, people have embraced international social trends, although with a bit of delay… So if e-commerce is experiencing a demand explosion, the Middle East has been witnessing steady growth of service providers and online shoppers… It is inevitable that people ride the e-commerce wave and blow up the shopping barriers, in a place where social barriers come as a second nature.

If you are involved in e-commerce or have plans to enter this field, share your thoughts with us. Send your comments and we will respond back to you.

Do you need a superman in your company?

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LeadershipCompanies can’t survive with a superman or Tarzan on the top. No one person is qualified to fulfill all tasks or take all decisions. This person simply doesn’t exist.

What companies need is an organization that works together seamlessly with common objectives and clear controls… Oh, yes and a fair dictator at the top…. because decisions by concensus are sometimes deadly, as they dilute the purpose of the task at hand….

Challenges of the Manufacturing sector in Saudi Arabia

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By Mohammed Hajjar

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Saudi Arabia’s economic diversification drive has been a case study where a young country has achieved enormous progress in such a little time. Unlike the Dubai model of encouraging financial services, trade and real estate, the Saudi model centers on the more traditional route of promoting industry (especially manufacturing). And it has notched up key successes so far. Petrochemicals is perhaps the best example of how the country has leveraged its competitive advantage in a key natural resource, oil, to add value across the sector.

Real GDP growth in Saudi Arabia -- Source: IMF

Real GDP growth in Saudi Arabia — Source: IMF

Other successful ventures have been in steel and related products, construction materials (cement, ceramics) and, to a much lesser extent, food processing. These changes in the industrial landscape coupled with rising household wealth have encouraged entrepreneurship, boosted key services sectors, and turned the focus of policy on education and research.

Ongoing projects in Saudi Arabia under various sectors (in USD billion) --Source: MEED 2012

Ongoing projects in Saudi Arabia under various sectors (in USD billion) –Source: MEED 2012

Yet, with all the success that it has achieved, there are serious challenges that the manufacturing and the wider industry face:

First, growth in manufacturing has been mostly energy-intensive, which is good for the short term, but not long term.

Second, these industries are highly capital-intensive, thereby not generating enough jobs for citizens. Moreover, job opportunities have come up mostly in the high-skilled segment, while semi- and low-skilled employment avenues are few. This in turn poses problems of inequity and unbalanced growth of the wider economy.

Third, there is a lack of conscious promotion of industries to service a wider and diversified market; it is not clear whether Asia and Africa are in the radar of the current industrial policy.

In what can be construed as a positive sign for the Kingdom, solutions for these challenges are already being debated in policy circles.

As the global economy shifts momentum away from the West, one would wonder whether the change pace is fast enough.

The most important thing is to promote businesses across the value chain in a particular sector.
Looking into the value chain is critical for fostering entrepreneurship, generating semi-skilled and low-skilled jobs, reducing dependence on imports of critical components within high value-added industries while inducing innovation. The most proven way to achieve this is by promoting small and medium size enterprises (SMEs) that traditionally fill in the gaps in the mid to low value-added segments. Although policy support for SMEs seems to be there, more cluster-based initiatives are required. For instance, the government should provide support in business planning, easy credit, training to workers; it should connect to end-customers (e.g. larger firms) and promote IT for product and process efficiency. Practical lessons can be learnt from from successes in both advanced (Mittelstand in Germany) and emerging economies (China).

Even within the high value-added segment, there is the need to promote industries that source from one another.

For example, sectors such as automotives, steel and energy are linked to one another. Foreign companies are starting to take notice of the existing capabilities Saudi Arabia. Jaguar Land Rover planning a plant in the Kingdom is an indication of this. The time is also perfect for policymakers to promote technology transfers more aggressively, heralding a new wave of industrial innovation in the country. Most importantly, given Saudi Arabia’s strategic location between Africa and Asia, industrialization with a wider view to capture these foreign markets should be pursued. Only such a move will add a different dimension to the Kingdom’s products than just oil.

What sectors within manufacturing do you believe should be focused on while providing value added products. Share your thoughts and comments.

Is your business stumbling??

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Shout louder, may be you get heard...

Shout louder, may be you get heard…

Picture this: You have a great company, you have developed great products but your customers aren’t knocking at your door… Does that sound familiar?

If you answered yes, you may have an ineffective communication platform and your voice is not being heard. Read on.

Few decades ago, if you wanted to get your voice heard, all you needed to do was to stand on a stage or an elevated place and speak with a loud voice… You raise your voice, people hear you, message delivered… Game over..

Today it’s a bit more complicated. The audience is made up, not only of potential clients but of contacts, connections and followers. And your stage, by which you connect with existing and potential audience, has become more complex and diversified. It is made up of websites, blogs, twitter, Facebook, company videos and brochures, podcasts, personal appearances on TV and conferences, etc…

Building a great product is never enough… We have all heard of great products that have failed miserably… As the saying goes, it was left in the dark. While management bloated about the features of the products, customers either didn’t about it or simply didn’t understand the value of that great product. And, by the way, this doesn’t apply only to consumer products… It also applies to financial products, professional services (like doctors, lawyers, computer programmers, consultants, etc..).

Your communication platform is the highway on which your message to the world travels. Build the right highway and you get to your destination on time. Build the wrong highway, you will either arrive to the wrong direction or be forced to make many detours. Eventually, you may arrive but you will arrive late, bruised and tired.

so how do you build the right communication platform? There are 7 steps to it:
1. Start by building a product or service that has a WOW effect which communicates with people emotionally and logically. Think about the total experience not only the product itself.
2. Decide on the key product attributes that is, really, why are people buying the product or service. People look for what the product has to offer them and not for the product itself.
3. Develop a specific, clear, concise message not about the product but about the benefits and the problem it has solved. This is true for every industry. For example, in the household sector, people are not interested in the drill they buy, but in the picture they want to hang on the wall. And in the financial sector, clients are not interested in purchasing an investment product, they are interested in the money they make from that investment and the security they will have.
4. Decide on the components you will use and how they fit together: press releases, twitter, Facebook, conferences, journalist round tables, fact sheets, email campaign, blogs, video posts, special media appearance such as TV and conferences. Don’t dwell on corporate profiles and brochures, they don’t have much value. Focus on developing a good website and keep it up to date.
5. Engage your audience and ask them for feedback. What they will tell you is better than hitting the jackpot.
6. Monitor the exposure. When you issue a press release, you need to monitor where it gets published and what’s the potential number of readers. There are many companies that offer this service for a small fee.
7. Continuously fine tune your message according to your audience and their feedback. This is not a one time shot. It’s an ongoing process… So perform while you transform. Don’t wait until you build the best website or the perfect report… “best” and “perfect” don’t exist and never will.

Have you been involved in developing or launching a great product that miserably failed? If yes, please share your thoughts with us.

Why being unreasonable is reasonable for your business

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Ideas must be burnt before reaching their real values

Ideas must be burnt before reaching their real values

What would your boss and your colleagues say if you acted unreasonably… Would they give you a pat on the back or would they tell you that you have gone too far? Reasonable is good, it is safe, it is part of the culture and it is what everyone expects… But if we behave in the way everyone expects, we are going to deliver what everyone else does or delivers… Breakthroughs are not done by people who behaved reasonably…

So by being reasonable, here lies the problem… you are not doing anything new… You are just surrendering to the corporate assumptions no matter how wrong or outdated they are… One of my previous clients had rules that dated back to more than 60 years when it was owned by a foreign company.

People talk about thinking out of the box and about unconventional thinking… but as a matter of fact most organizations are still boxed in and are not ready to step out of it… Have you ever noticed that amongst all of the people who changed the world or experienced phenomenal success there exists one common factor? They don’t think like everyone else! In fact, they are on a completely different plain of consciousness. Whereas most people look at the world and see an endless stream of rules, obligations and boundaries, they see a playground where they can do what they like.

It is the difference in behavior that separates the reasonable from the unreasonable mind.

We are programmed to believe that it is reasonable to accept that business culture has limitations, that there’s a certain level beyond which we can’t go and that we should do as we’re told. A reasonable person just adapts to this culture and works within the parameters like a poppy on a leash. However, the unreasonable person does the opposite. Instead of accepting the de-factos, they question the assumptions which lead them to an insight that carries with it one of the keys to greatness.

Where would Steve Jobs be if he accepted mobile phones as they were without demanding perfection of the device as well as the packaging box… Where would be Lou Grestner if he accepted that the IBM computer should be very technical and aggravating to the average user… Where would Galileo be if he accepted that the earth was the centre of the universe? This insistence on completely ignoring what is considered reasonable is what leads to all of the great breakthroughs and discoveries of mankind. Therefore, positioning yourself in the space outside the normal boundaries of conventional thinking becomes an absolute necessity for anyone looking to maximise their potential.

What is the secret sauce for being unreasonable? Just be yourself and express it out.

The reason why we often debate this issue is that our lives is wrapped with the norms that surround us. This is how we view our environment and how people around us view us. Our standards are skewed. Any person who is true to himself and his wishes will not accept the status quo. So when they tell you that you are going too far, just stick to your belief and be true to what you stand for. They may call you unreasonable but they will thank you in the end.

Have you experienced a situation where you have behaved unreasonably, which paid off in the end? Please share it with us…

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Something worth doing… is worth doing right

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I am baffled at how often companies lose customers and market share because of a simple oversight: paying attention to details. How often it is that we have researched a product or a service, decided on the purchase, secured the right amount to purchase only to be let down by the overall experience. Whether customer service, after sale support, packaging, delivery, in-store experience, etc. The reasons are endless.

I recently engaged a company to execute a landscaping project after they have submitted an amazing design that received high marks from everyone who’s seen it. Fast forward to execution, and the 45 day project turned into a six months nightmare and the clock is still ticking. What went wrong and why did that happen?

While the original designer had a passion for his work and focused on every single detail, the builders treated the work as just another job that must get done.

For a start there was no capable project management that could supervise the work and make sure whatever is delivered would be according to the specifications. So the poor workers, looked at the maps, did their best and often the best wasn’t good. They had to redo every task again. From stone cladding, to grass plantation to external ornament everything was redone twice or three times.

I am certain this company lost money on our project… There is no way on earth they could have even broken even. Reflecting on this situation, I realized that this company could have saved themselves and their client (who is me) lots of frustration by following 3 simple steps:
1. Appoint a capable project management who understands the full solution and really care about the outcome
2. Make sure the workers understand what they are working on, the full picture and the quality of the outcome before starting the work process.
3. Every few hours or days stop and check the work completed before the final product is delivered.

It sounds so simple… I know.. But did they follow it? No… Make sure you leave your comments and share with me similar stories that you have faced and what are your suggestions for improvement after you watch the following video clip which is one of my all time favorites: The Coca Cola Perfectionist

The anatomy of real achievement

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Leadership is about continuous improvement and change

Leadership is about continuous improvement and change

People attribute achievement to success, yet once achieved they immediately realize that it was only a passing phase and start seeking another milestone in their quest for achievement. Yet, achievement is not a quick patch or a pain-killer pill that can be taken to accomplish the desired effect. It’s a journey with programmable steps…

For many years, I have watched how successful people make decisions and why some fulfill their dreams while others do not. By working with many business owners and accomplished leaders in different cultures around the world, I have had a chance to observe these people in performing their daily routines which led to identifying the common threads that weave into their character. There are 7 DNA threads that can be developed if practiced every day … they simply need to become a habit in our daily routine:

1. Clarity
2. Accuracy
3. Relevance
4. Common sense
5. Openness
6. thoroughness
7. Depth

Those 7 threads are the execution platform that a leader should develop in order to execute a project or a task right…

Hence the platform is a pre-requisite and must be developed, no question about it… Yet only developing the platform alone is not enough as it does not lead to effective achievement. For that to happen, there are 7 soft skills that must be cultivated:

1. Having a higher purpose
2. Asking relevant questions
3. Access to credible information
4. Forming a coherent opinion
5. Understanding of implications
6. Applying the right assumptions
7. Being fair

Once the execution platform and the 7 soft skills have been achieved and become part of the daily routine, the true sense of achievement is realized… Real achievers usually transmit specific signals which people can pick up and notice immediately. Check the following signals, how many of them apply to you:
1. Humility
2. Autonomy
3. Integrity
4. Courage
5. Perseverance
6. Confidence
7. Empathy

 

Coming soon…. every Wednesday

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Like sunlight crowling through heavy clouds, so is common sense will alway manage to reach us...

Like sunlight crowling through heavy clouds, so is common sense will alway manage to reach us…

Welcome to the Hajjar Report. This is not a report that would put you to sleep… and it is not a report that you have to spend hours reading… It’s a 10-minute read, every Friday, that would provide eye-opening information and how-to advice.

By working with a team of qualified researchers and industry specialists, this report will provide:

  1. Practical advice;
  2. Industry insight; and
  3. Forward thinking

Who needs that? Every business leader, business owner and professional who has the wise curiosity to ask why and why not? and who has the guts to improve…

So wait for me while i get my site up and running… I shall be back ;)

Mohammed Hajjar