Despite the devastating impact of the Covid-19 pandemic on many sectors of the economy, especially the industry, tourism, and commerce, it has been a boon for e-commerce, with increased online shopping and boosted sales.
Today, as the US e-commerce giant Amazon enters the Egyptian market after acquiring the website Souq.com with an investment worth billions, other online shopping websites are concerned that Amazon will pull the rug out from under their feet even as the e-commerce boom continues.
According to experts, Amazon’s arrival in Egypt will change the online shopping map, gaining greater customer trust, improving product quality, and leading to faster deliveries. Other web retailers have already improved their services, with the Jumia website working during the pandemic to raise customer confidence in online shopping and speed up the digitisation of Egyptian retail by giving shoppers the option of no-interest payment plans of more than a year.
According to the web retailer Mrsool, revenues more than doubled, and users quadrupled during the pandemic, but greater competition with other companies has raised the cost of acquiring new customers.
Hisham Safwat, executive director of Jumia Egypt, said the pandemic had helped the company lead online shopping in Egypt. Retail sales had risen by 19 per cent in 2020, he said, and people had flocked to online shopping sites to buy what they needed instead of using more traditional ways of shopping. Customer confidence in online shopping had grown, he said, and the state had also contributed to increased e-commerce by leading the transition to a cashless society.
Safwat said the pandemic had an adverse impact on many sectors, but as the virus spread it reflected positively on e-commerce and online shopping sites because shoppers preferred to stay at home and shop on Jumia and other sites instead of going out and shopping in person. “We saw a remarkable increase in online shoppers of different ages and social backgrounds, and this meant we sold more of all types of products, especially basic ones,” he said.
“Despite the devastating impact of Covid-19, Jumia worked hard to protect its staff, whether employees or delivery teams. We applied strict policies in order to keep them and our customers safe, which is our company’s priority,” Safwat said.
Overall, the pandemic was a boost for e-commerce and the inclusion of new categories of customers who took advantage of online shopping, hastening digitisation and the move towards financial inclusion, a policy promoted by the state. According to a report by the UN Conference on Trade and Development (UNCTAD), online retail grew substantially in many countries in 2020. E-commerce transactions around the globe leaped to $26.7 trillion in 2019, a four per cent increase from 2018.
Sales on Jumia since the pandemic began have grown substantially due to high demand for online shopping even for basic commodities. As more shoppers sat at their keyboards, their confidence in online transactions grew for food, commodities, and online payments. Meanwhile, Egyptian and international banks operating in Egypt allowed shoppers to pay in installments without interest for more than one year, making online shopping even more attractive to customers.
Safwat said that the pandemic had encouraged more customers to use JumiaPay, an easy and safe way to pay online for services such as charging mobile phones, paying electricity, gas, water and Internet bills, and donating to charity. The application means that such services can be paid for at any time. Customer priorities had changed, he said, and there had been growing demand for essential goods paid for using electronic payments over the past 18 months.
Asked what were the most popular items, Safwat said that “products such as clothes, make-up, perfumes, health and beauty products, and electronics are bestsellers, followed by food and groceries which are very popular among Egyptian shoppers.
“Covid-19 created a new way of buying and selling, whereby products are viewed online and through stores and online platforms. This helped online sellers and increased customer confidence, especially since all products are available online, including food. Online shopping and e-commerce have become a new trend in shopping, now that many Egyptians are choosing online shopping instead of traditional modes of purchasing,” he said.
“During the pandemic, Jumia also innovated in finding new ways to deliver products safely, which positively impacted customers’ experience as they sought easier, safer, and faster ways to shop without leaving their homes. Jumia provided high-quality local and overseas products at competitive rates.”
“Jumia provided key services, which put it ahead of the competition. Our services are not limited to selling and buying, but also include JumiaPay services. The company recently chose Egypt to launch its electronic payments centre that services Egypt and Africa and employs dozens of young people,” Safwat said.
“Jumia offers services to support small businesses and independent contractors, and more recently Jumia Food has become a hit,” he said. “The company is always seeking new ways to meet the demands of the Egyptian market.”
MRSOOL IN EGYPT: The online retail site Mrsool also became very popular during the pandemic.
Osama Harfoush, director of Mrsool Egypt, said that Covid-19 had raised the demand for smart apps, especially during times of quarantine and when people were staying at home for long periods of time. They had sought new ways to meet their needs, whether using phone delivery services or using apps offering services such as online payments.
He said that e-commerce in Egypt had risen to LE40 billion last year, and revenues from the Mrsool app had risen by 230 per cent. The number of users had quadrupled during the pandemic, and demand had risen because of the growing services the app provides. Most importantly, Mrsool had partnered with shops and restaurants during the curfew, delivering anything anywhere within legal boundaries. The platform had relied on agents in Cairo, Alexandria and other governorates, he said.
Mrsool was founded in Saudi Arabia in 2015 and began operations in Egypt in 2020, using promotional campaigns to introduce the app to users. In mid-2020, the company began partnering with restaurants, clothing stores, and various shops, and by the end of the year, it had secured 28 per cent of the food and fast-delivery market.
Harfoush said some items are banned from the company’s delivery services, including animals. When an order is placed, a company rep inspects the content of the package before he takes it for delivery and posts a photograph on an interactive chat with the client. He said that the field is highly competitive and that gaining customers could be difficult. There are some 50 million Internet users in Egypt, he said, and 35 million of these use smart phones and seven to 10 million use phones to buy products.
Harfoush said that 60 per cent of Mrsool customers are in Cairo, while 15 to 18 per cent are in Alexandria. The company focuses its social-media marketing campaigns on customers who have significant purchasing power, have high smartphone usage, and are often football fans. Social media is the best channel for marketing, he said, though the company also uses billboards, television, and newspaper advertisements.
Social-media campaigns help to identify the behaviours of target customers, as well as their purchasing trends and preferences. They help in adjusting advertising campaigns and budgets. Mrsool also carries out research to identify target customers.
Harfoush said that more and more customers are becoming aware of the convenience of apps, especially since the government is also intent on digitising services and improving electronic payments. The latter have risen to 45 per cent of all transactions, he said, and payment upon delivery has dropped to 55 per cent from 75 per cent. Mrsool provides 24/7 accessibility so customers can have packages delivered at any time, Harfoush said, adding that the greatest challenge was to reach target customers and promote the app’s services.
Medhat Yassin, a marketing and business-development consultant, said the pandemic had given a boost to the growth of online businesses, causing it to grow faster than over the past decade. Online business, especially online shopping, had begun to gain popularity in 2013, he said, though the greatest challenge at that time had been customer trust in some websites due to concerns about electronic payments.
Such concerns had been overcome by using pay-upon-delivery services to encourage customers to buy from websites, which in turn had improved shipping and increased online sales, Yassin said.
He said that the state had encouraged electronic payments, increasing customers’ confidence in them. Today, online businesses were facing various challenges including the cost of advertising, the data analysis of target customers, and providing quality products in a highly competitive market where there is more supply than demand, he said, adding that companies were always in search of new customers.
AMAZON ENTERS THE MARKET: Yehia Othman, an e-marketing specialist and marketing manager at the Fakahany app, said that “Amazon’s investment in Egypt is estimated in the billions, and it will provide more than 3,000 jobs, making Egypt the company’s largest investment in Africa.
“This is very economically beneficial, notably because it will raise the quality of products because of Amazon’s firm commitment to maintaining high standards and fast delivery within one or two days. This will impact the shopping map in Egypt and increase competition, which in turn will improve the services, prices, and delivery speed of Amazon’s competitors. The greatest beneficiary will be the customer.”
Asked how Amazon Egypt will impact other shopping websites, such as Jumia and Noon in Egypt, Othman said that there would be an impact. “We are talking about the global giant Amazon, which means increased competition and transforming the market from a ‘blue ocean’ to a ‘red ocean’. This is a marketing term meaning extreme competition, with the victor being the one that provides the best quality, price, and speed and the one that is most innovative in marketing.”
He said, that Amazon’s rivals would need to overhaul their plans to invigorate their marketing campaigns and maintain their edge. “They must be creative and distinguish themselves to gain customer confidence, while upgrading for faster delivery and raising standards,” he said.
“This is the only way to reach the standards of Amazon and hold onto sellers and suppliers while keeping prices competitive and quality high. In the end, the customer is only interested in quality and price,” Othman said.
Any company that can do this will take a greater share of the market, he said, especially since existing companies have a secure foothold in the Egyptian market.
Fadi Ramsey, an e-marketing expert and lecturer in digital media at the American University in Cairo, said that Amazon’s arrival in Egypt had not been unexpected, especially since it had acquired Souq.com.
“Amazon is quickly gaining ground since it is a renowned brand that provides excellent logistical services at a time when competition is increasing with other shopping sites, most notably Jumia and Noon,” Ramsey said.
Amazon acquired Souq.com in 2017 for $580 million and opened a warehouse in 10 Ramadan City in the Sharqiya governorate. Souq.com was founded in 2007 by Ronaldo Mouchawar, Samih Toukan, and Hossam Khouri and began operations in Egypt in 2010, eventually becoming a giant online shopping website.
Mouchawar, now vice president of Amazon Middle East and North Africa, said the area of the warehouse was 28,000 square metres and that it was part of the company’s investment in logistical services in the Egyptian market. The company owns more than 15 delivery hubs across the country, according to a statement.
Amazon has officially launched its Egyptian website Amazon.eg as an alternative to Souq.com, and it plans to offer millions of products and quality brand names in electronics, clothing, household and kitchenware, and groceries, as well as Amazon products and appliances.
Amazon.eg provides free delivery for purchases of LE350 or more and same-day and next-day delivery in some cities. The company will also provide its global experience and advanced logistical services in shipment and delivery tracking. All these services are covered by Amazon’s “A-Z guarantee” for orders on Amazon.eg.
Meanwhile, Souq.com customers can use the same login on Amazon.eg and still access their wish lists, previous orders, delivery addresses, payment methods, and previous questions to customer services. This has made the transition for customers seamless, an important consideration for consumers.
*A version of this article appears in print in the 9 December, 2021 edition of Al-Ahram Weekly.