Pandemic caused ‘drastic’ shift in region’s e-commerce, say major retailers

JEDDAH: The coronavirus pandemic led to “drastic” changes in the e-commerce sector, as users embraced digital payments, were forced to buy staple food items online and invested in products to make working from home easier, according to leading retailers in the Kingdom.

“About a year ago, cash on delivery was basically stopped by law and customers had to force themselves to adapt to digital payment methods. This was a very drastic baseline shift that we saw. In the last nine years or so, I’ve seen nothing change the cash on delivery component in our market and finally COVID-19 did,” Faraz Khalid, CEO of Noon, said in a session at the 7th Retail Leaders Circle digital seminar this week.

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Noon is an online shopping platform backed by Saudi Arabia’s Public Investment Fund (PIF) and Dubai businessman Mohamed Alabbar, which was launched in 2017 on the back of around $1 billion in funding.

Khalid also highlighted the fact that the pandemic forced workers to remain at home, due to restrictions put in place to prevent the spread of COVID-19, leading to a radical shift in the category mix of many e-commerce websites.

“We went from first adopted categories like fashion, beauty, and electronics to more staples, home goods, people buying things that they usually buy in an offline context. In that sense, I think it’s a healthy sign because you’ve got a more sustainable payment mix; customers are coming back more regularly across categories.”

The Noon session also discussed the fact that grocery items are often the most difficult online category for e-commerce retailers, due to the high frequency of purchases, meaning customers “are very demanding, hard to serve.”

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Saud Ghassan Al-Sulaiman, CEO of IKEA Saudi Arabia and Bahrain, told delegates at the retail event that the pandemic forced consumers to rapidly alter their shopping behavior.

“The most dramatic changes that took place in that period were in our own furniture industry. Consumers who had been spending more time at home realized that they need to invest more in their home. We saw a few categories accelerating more than others; we saw home office and children’s range accelerating more than other parts of the range,” he said.

Like many major retailers, Al-Sulaiman said IKEA witnessed huge growth in e-commerce last year.

“During the pandemic, we saw e-commerce growing seven times,” he said, pointing out that the company launched its online store in 2020 after just two weeks in development.

Source: Arab News