Next five years will be golden for ecommerce in the Middle East: Shiprocket's Akshay Ghulati

In a LinkedIn Live conversation with YourStory’s Gulf Edition (YS Gulf), Akshay Ghulati, Co-founder of Indian ecommerce shipping company Shiprocket gave a peek into how the space is booming in the Middle East.

The next five years will be seen as a golden period for the region’s ecommerce space, Ghulati predicts. “Many players would be able to set up direct-to-consumer (D2C) brands and sell in the region and globally.”

However, Ghulati cautioned that one cannot apply the same playbook in the Middle East as the regional nuances in both regions are different. To illustrate he used the example of how quick commerce has been adopted in both regions. While Q-commerce is slowly picking up in India with same-day deliveries of groceries and medicines, it is a thriving ecosystem in the Middle East with people ordering iPhones and getting them delivered within the same day. This is owed to a robust delivery system set up by ecommerce players.

Per Ghulati, there were two regions on the shortlist when it came to contemplating expansions. Eventually, Shiprocket settled on a foray into the Middle East, beginning its first set of international operations in Saudi Arabia.

“We went ahead with the latter (Middle East) due to multiple reasons. One, there are a lot of similarities between the Indian and Middle Eastern markets, especially in terms of the popularity of cash-on-delivery and geographical complexity. Two, there is a great demand for Indian goods from the huge Indian diaspora present there,” he explains. 

Shiprocket has adopted a hyperlocal delivery system and partnerships with local logistics players to tap into the market and facilitate seamless same-day delivery across borders in the Middle East.

Regulations and opportunities

As regulations tighten, setting up a seamless logistics system is critical. Storing goods in local free trade zones from where they can be transported will become standard in ecommerce, says Ghulati. 

“The growth of ecommerce in countries like the UAE and Saudi Arabia is at a unique inflection point where some of our ecommerce partners are clocking 3X to 5X growth every year,” says Ghulati. “During Ramadan, it can go up to 10 times... If you don’t have efficient systems to handle such a high growth rate within the 30 days of Ramadan, you will never be able to deliver a good customer experience and retain customers for the long term.”

Regional logistics players will also need to adopt technology at a robust pace to keep up with the ecommerce boom and sustain, particularly as cross-border logistics picks up pace. 

On taxation, Ghulati called for a uniform tax policy across the Middle East. Some countries like Saudi Arabia charge as high as 5% withholding tax, while there is no withholding tax in the UAE.

“While it doesn’t create any problem in the movement of goods, the issue arises when payments have to be remitted back to the local countries. So, going forward, removing tax anomalies in the region will be one of the important steps for the e-commerce ecosystem,” Ghulati concludes.