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Over the past decade there has been a significant change in how people view the service industry. The traditional “hire-receive-pay” culture has been replaced by an instant gratification culture of “tap-receive-pay-rate”. Initially, food, groceries, medication, and transportation were the first services to be offered through mobile apps, but now, the industry has expanded to include services like home cleaning, handymen, and personal grooming.
In the MENA region, Redseer estimates that the e-commerce market is expected to reach a total market size of US$100 billion by 2023. The UAE, which has the highest internet penetration rate in the region, is expected to see the on-demand home services sector grow at a compound annual rate of 9.7% until 2026. This growth is driven by the rapidly changing consumer behavior in the experience economy, as consumers seek innovative services that cater to their busy lifestyles. On-demand home services are reshaping the consumer journey, providing convenient and efficient solutions to meet the demands of modern consumers.
This represents an amazing growth opportunity, as more consumers turn to online shopping for their everyday needs. Those that embrace digital transformation and e-commerce strategies are well-positioned to succeed in this dynamic market. That said, whether SMEs or larger enterprises, businesses can get whiplash from keeping up with ever-evolving consumer behaviors. For SMEs especially, to continuously invest in new strategies every 8-12 months is counterproductive, and a roadmap to bankruptcy.
Since our launch as a startup in 2014, we at Urban Company grow, learn, and adapt to consumers every day. What we’ve observed is that no matter the size of the organization, at the executive level, businesses need to decide whether they want to build a differentiated quality model, or a low-cost/price model. Most SMEs today go the latter route- but this is not a scalable strategy.
To understand why, a closer look at the market in which we operate in is needed. Consumers in the Middle East are fairly price-conscious, and e-commerce SMEs need to devise strategies to deliver a decent experience, while continuously improving their costs and maintaining low prices. UAE consumers are shopping-savvy, and they are known for their bargain hunting, as there is a continuous promotional calendar throughout the year. This has created a competitive retail environment, where retailers must constantly innovate, and offer compelling promotions to attract and retain customers.
In addition, the majority of the UAE population consists of expatriates (around 89%)- immigration out of the country is more than in most other markets. This puts additional pressure on spending for customer acquisition, which costs significantly more. While larger e-commerce companies have the benefit of data and deeper pockets to reactivate old users, SMEs are unable to conduct structured and effective customer relationship management. But this remains an area that SMEs should invest in.
Related: Five Tough Love Pieces Of Business Advice That SMEs Should Take To Heart
Generally, SMEs are able to manage a low-cost pricing model when they kickstart their e-commerce business. But as soon as they try to scale, they are unable to manage operations efficiently to cover their fixed costs. Hence, a dynamic pricing model based on the user’s location, time of the day/week, etc. is a big lever to maintain profitability. Keeping these points in mind, SMEs in this realm would be wise to take on a customer- and quality-centric route to profitability instead.
The number one investment should be in consumer experience, which helps to compound the service your business provides. As consumers become more digitally savvy, they demand personalized shopping experiences. Around 65% of customers end their relationship with brands due to negative service experiences. E-commerce platforms that offer personalized product recommendations, tailored promotions, and customized content are likely to perform well in 2023. For Urban Company, this is best done by vetting our professionals while also enabling them with new-age tools/products to deliver a great experience.
To maintain a competitive advantage against traditional brick-and-mortar businesses, e-commerce businesses needs to continuously innovate and improve their service experiences, while keeping costs low. Optimizing one’s online presence should be key (e.g. on one’s mobile app, website, Google listings, and social media pages), as this is where your customer’s journey and experience begins. Based on data from GfK, a German market intelligence company, the majority of UAE consumers research online before making a purchase. Specifically, in the last five months, 72% of consumers surveyed reported conducting online research before making a purchase. Additionally, a staggering 85% of consumers in the UAE made online purchases through a mobile shopping app.
Businesses also need to remember that expectations for easy access to customer support and quick error resolution are extremely high in the UAE. Having 24/7, quick support chats and call centres available will help ensure that brand loyalty stays high. In fact, around 95% of consumers consider it to be key in their decision to stay with a brand. Furthermore, 89% of customers are inclined to make repeat purchases after having a positive customer service experience. Neglecting customer service in the e-commerce domain can be a colossal mistake.
In the on-demand home services market, the primary deliverers of customer service are trainers. Their job satisfaction, training, and attitude are what garner repeat customers. With the UAE’s focus on the skills and knowledge-based economy, with a set goal of doubling the national economy by 2030, this is pertinent. We hold training boot camps for our professionals, with regular retraining so that they are up to date with the latest trends, tech and products as well as personnel skills. Another way is to provide incentives to the best-rated professionals monthly/annually, versus keeping them on fixed salaries. At Urban Company, we were one of the pioneers to leverage the vast amount of data collected from our app to enhance the skills and quality of our service professionals by integrating training and development initiatives into our work environment based on customer feedback.
Instilling such a company culture right from the top -which, in our case, means a willingness to train employees, cultivate a sense of curiosity in them, while also lending each of them professional autonomy to carry out the service- is thus a great roadmap to ensuring that customers have an enjoyable experience with your business.
Related: 12 Tactics To Help MENA SMEs Navigate Employee Engagement Challenges In A Digital-First World
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