Open for business avails own infrastructure to sellers

Tags: E-commerceSouq.comUnited Arab Emirates
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Open for business Daoud says economies of scale allows the company offer a far better value proposition to its partners.
By  David Ndichu Published  November 8, 2016

Third party resellers at leading Middle East e-commerce site now have access to the site’s expansive logistics network, thanks to the launch of the “Fulfilled by SOUQ” programme.

In 2012, became a first party retailer where the company begun stocking its own inventory and selling directly to customers on its platform. In the process, the company built up a considerable physical footprint through a network of fulfilment centres throughout the region to serve its internal needs.

Chief operating officer Wisam Daoud, says the result is that now maintains a large physical network and expertise.  “We have become quite the experts in fulfilling e-commerce products, a completely different proposition from traditional warehousing and logistics,” says Daoud.

With that in mind, SOUQ decided to open its infrastructure to third party seller partners. “Fulfilled by SOUQ is the public-facing programme that opens up our fulfilment centres, and capabilities, to third party sellers,” explains Daoud.  

By joining the Fulfilled by SOUQ programme, any seller on the site can send in their inventory, where the company manages all the storage, picking and packing as well as taking care of the entire delivery and logistics process on their behalf. “It’s a completely touch free service we are providing to all the sellers on,” explains Daoud.

This platform was unveiled during the recent ‘SOUQ Engage 2016’ event, an integrated forum for sellers to interact with the leadership team and accustom themselves with the company’s new offerings.

Sellers will be charged a fee to use the service, albeit with a free introductory phase in place until January 1st of 2017.  The fee charged is quite nominal, says Daoud, as the intention is not to monetise the service. “The objective of the programme is to ensure that as much inventory as possible qualifies for the “Fulfilled by SOUQ” programme, which allows us to provide a much better shopping buying experience than if third party sellers do their own fulfilment,” says Daoud.

When a product is under the programme, it gets the “Fulfilled by SOUQ” branding on the site and the mobile app, while qualifying for next day or same day shipping which typically would be impossible with third parties.  The badge also allows sellers to take part in SOUQ’s campaigns such as White Friday etc. “The benefits of using the programme far outweigh the cost the seller has to pay,” asserts Daoud.

Sellers say the fee the company is proposing is more competitive than if they were to run their own operations, says Daoud. “SOUQ has the massive facilities, the manpower and the capabilities, so we are able to do it at much better economics than they can as SMEs.”

The major investments in logistics notwithstanding, remains a technology company at its core, says Daoud. “We are a platform that enables sellers on one side and buyers on the other to do business. We are very technically integrated and technology powers everything that we do.”

E-commerce may be online, but the reality is that products have to move from location A to B. Using technology however allows SOUQ do that more efficiently and at scale, says Daoud.

Take its annual White Friday shopping bonanza as an example. SOUQ expects to ship more than a million items in just a few days this year. That’s a massive volume, Daoud observes, and unless the technology is in place to enable it, the event would be an impossible feat to achieve, especially in the region where the ideal infrastructure to actually enable such businesses is not developed.

“What we have done well is connecting digital to physical,” says Daoud. “All the boxes for shipping have barcodes, numbers and names-all those things mean something to our systems. Our fulfilment and logistics centres have no humans making decisions-the machines tell the humans exactly what to do.”

For drivers as well, all the maps and routing for drivers are all digital, including their field terminals.

Daoud explains that all the software at is the company’s own intellectual property. “All our software is all built in-house with no licensed software. We have our own technology teams and technology centres and we invest quite heavily in technology.”

“We use a lot of open source technology with extensive customisation, which allows us to be a lot more agile and able to address market demands a lot more rapidly and at scale,” says Daoud.

Challenges in emerging markets such as the Middle East only empowers a company like to be more innovative. “Shortcomings in infrastructure, manpower or technology available in this region forces us to make even bigger jumps that similar organisations in the West might,” says Daoud.

An example of this is the poor physical addressing system prevalent in the region. So has leapfrogged the challenge of physical addresses by using maps and coordinates that ping a customer’s location through their phone. “We are delivering to the human, via his/her phone, enabling us identify their location regardless of where "here" is.”

The same flexibility applies to payment methods. The Cash on Delivery mode of payment, preferred by customers in the region, has been turned into a competitive advantage by the company, Daoud says. “Our on-the-ground footprint coverage and know-how of the regional market affords us a huge competitive advantage to any potential threat from internal or external competitors.”

Mobile is the preferred shopping method in the region. “The shift from web to mobile shopping has already happened on,” says Daoud, “Buying via desktop is today in the minority,” he adds.

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