To catch up with booming e-commerce in Egypt, domestic courier/delivery gets revamps

CAIRO – 11 November 2020: As e-commerce has been booming in Egypt, the need for upgrading logistics services offered is growing. Titled "Digitalizing Logistics," a seminar was organized Tuesday by the Egyptian Business Angels Network (Malaikah) to examine options.

Courier/Delivery Industry in Egypt

Founder and CEO of Mylerz Sameh Gharaibeh said there is a factory-to-consumer trend, and that – when it comes to e-commerce - if the consumer is happy, they will order again through the merchant.

"The courier industry used to be a B2B industry but that’s no longer true," Gharaibeh said. Gharaibeh said that his company – possessing 16 hubs - has hired 120 employees in 11 months so in a year the figure can be 1,000.

In order to meet the preferences of Egyptian consumers, "try and buy experience must be introduced in online shopping," he added.

"We deal with high-end brands and unknown ones…We have e-payment and digital marketing options partnering up with other companies…Although our core business is delivery, we're enablers to other services," Founder and CEO of R2S Logistics Mahdi El Olabi pointed out.

"We have the option of Pick Up and Drop Off (PUDO), and not just door to door whose success rate does not surpass 75%. Customers in Egypt prefer cash on delivery, and sometimes don’t respond to calls from unknown numbers (so they may prefer PUDO)," Olabi said.

Olabi considers his company an "asset operator" as it does not have a fleet. Yet, the delivery people working with it using their own vehicles are not considered freelancers as they get health insurance.

"Our assets are technology systems and people managing customer experience," Olabi clarifies.

"The very early online platforms invested in the fleet and warehouses as the customer acquisition cost was very high," Olabi said.

"There are currently 150 delivery companies in the Egyptian market but consolidation will happen so as 3-4 will win the rates," Olabi said.

Speaking of how the courier industry is booming, Olabi underlines that "people are investing in e-commerce platforms and FinTech," and hence, freight is coming strong. He added that manufacturing is booming in Egypt post floatation so inland transportation has been booming as a result.

Quality Service

"Studies show that 90% of customers having a good delivery experience order again from the same brand," Olabi added.

"We worked on elevating the image of the delivery boy in terms of appearance, training, and providing him with a smart phone that makes him connected," Olabi highlighted.

"Customers see the uniform of the delivery boy not the car brand…We have a very low turnover… The vehicles are always in good condition as they're their source of income…The payment we give them (delivery people) is not just in return for their effort but also to cover the costs of gasoline and vehicle use," Olabi said.

"Now, we adopt a purely variable pay but before we used to apply both variable pay and base salary," Olabi added.

For Gharaibeh, crowdsourcing is key as well as controlling every aspect of the business, including having one's own fleet, to ensure high quality.

"My client is not someone who would create multiple pages on social media switching between them because they don’t intend to maintain consumers," Gharaibeh added.

He added that delivery companies can play a role in decreasing the return rate through premium service as return causes damage to the merchant who pays the delivery charge either way.

"Ensuring quality can be accomplished through surveys, and mystery shopping among others," Olabi says.

Artificial Intelligence

Speaking of the role of artificial intelligence (AI), Gharaibeh said that it can be used for route optimization in order to reduce delivery time as AI can determine traffic status.

"It can be used to deliver in the time window set by the customer instead of telling them will come tomorrow and have them wait all day," Gharaibeh noted.

Olabi said AI can be deployed for carrying out predictive analytics so that the company is neither understaffed nor overstaffed.

International Players

Gharaibeh said international players have high-cost operations so they will not be willing to get LE50 per shipment, and hence, will not operate in Egypt's domestic courier/delivery sector.

"Big corporations wait for markets to get mature…That industry is still infant in MENA and is awaiting consolidation…Domestic is hectic so they prefer international delivery…Some of those do not have the option of cash on delivery," Olabi said.

Founder and Chairman of Malaikah Samir El Alaily pointed out that courier comapnies in Egypt offer payment facilities and not just delivery. As such, international delivery companies will have to deal with customs when it comes to international delivery, and that is hard to handle for the many documents requested.