“The Online Grocery Industry in KSA is currently positioned to be at a nascent stage where fewer companies are present and big players are still yet to enter. Companies are now strategizing regarding how they need to penetrate in the market. In future, they are expected to expand their scope from on demand grocery services to medicine, toys and food delivery services. “-Asim Jamil, Co Founder & CEO at Qareeb.com
KSA Online Grocery Market value has doubled since inception, suggesting that consumers are starting to get more comfortable ordering essentials foods items online. Demand for online grocery has increased among the people living independently as they are increasingly outsourcing their chores, such as grocery shopping to reliable vendors online. Even though the penetration has increased, there’s still a major proportion of the population that prefers to buy groceries from Supermarkets, Hypermarkets and Baqala Stores.
Due to COVID-19 Outbreak, people are avoiding crowded places and turning to online grocery shopping amid escalating fears. This last led to a double digit growth between 30-50% across essential product categories. Service providers partnered with third party operators to manage last mile logistics.
In conversation with Asim Jamil, CO Founder & CEO at Qareeb.com, we attempt to identify the key trends in the online grocery space and how Qareeb differentiates itself from other service providers.
How did you get associated with the Online Grocery Delivery Industry? What was the idea behind the introduction of Qareeb in KSA?
Qareeb is an online grocery delivery platform started in 2018. Me, My Co-Founder & COO, Mr.Umer Malik and the angel investor Mr. Ali Al Rajhi were thinking of doing something for the community based on providing some services to the manpower. We were thinking of two major concepts- Keep everyone busy and keep everyone happy. Different ideas were discussed and ultimately we finalized online grocery. We checked the market, ran some surveys and launched in KSA. We then partnered with multiple retailers, grocery stores and combined our delivery team to kick start grocery delivery services in the Kingdom. We started off in Riyadh and then expanded to Jeddah. During the same time, we started off in Pakistan as well.
Which business model is the company following in KSA?
It is a hyperlocal model where we connect different retailer stores with customers. In some fast moving products, we maintain inventory just to maintain quality and earn higher margins on those specific products. We are also into wholesale which is for B2B customers where we connect multiple wholesalers. We are focusing on being positioned as a B2B2C concept overall.
How has the market evolved in terms of adoption of online grocery service by the customers?
People in KSA prefer grocery shopping from hypermarkets as they visit with their families and kids and it is more of an entertainment for them. What we are doing is, we offer the customer an option of selecting products from multiple stores, which they won’t be able to do while physically shopping from supermarkets and hypermarkets. The trend is changing in the Kingdom and people are shifting to online grocery shopping especially during the Pandemic. They are not comfortable stepping out of the house to buy groceries; instead, they are comfortable in getting it delivered at their doorstep.
What are the current challenges to Online Grocery Industry in the Kingdom?
No business could sustain without challenges. We have witnessed our share of challenges but we have evolved from them. As a way of tackling the challenges, we have tried to make the process as much automated as possible. One of the major challenges is definitely procurement when you have a lot of SKUs and many a times the inventories are not well managed. Another major challenge is logistics. In my opinion, any organisation focusing on in-house logistics service isn’t a successful model unless and until you have massive volume to cater in a particular area. Shared economy for the rider and logistics is the successful model that is running in KSA.
How has the demand for online grocery been impacted due to the COVID situation? What steps have been taken by the company to cater to the growing needs of the customers?
No one was prepared for this situation, so obviously there was a big gap in demand and supply. We have seen 5-6 times volume growth in 24 hours in a number of orders. To cover this, there were a lot of challenges. There was a shortage of logistics and manpower. Observing these gaps, a lot of companies jumped in, looking for an opportunity to fill the gap. Although, the space has become a bit crowded in terms of logistics and last mile delivery. Companies who used to deliver in 1-2 days are taking 1-2 weeks to fulfill orders.
In addition to this, the mindset has changed. People are getting more and more comfortable in ordering groceries online. Customers have experienced the comfort of comparing prices, checking more than 8,000 products and getting the order delivered at their doorstep. Some people have not experienced this before. Now they have experienced this, they are encouraging others to do the same. Even the online payment increased from 5% before the pandemic to more than 60-70% during the pandemic.
How has the company scaled since inception and what has been the differentiating factor for Qareeb? Within a short span of time, the company was able to witness month on month growth which was a positive sign for the team. The quality that differentiates Qareeb from other players is the way we are taking extensive care on the customer service. We are treating every order as a personalized order. We are focusing on procurement of groceries to be fresh and not near to the date of expiry.
We are collaborating with multiple stores which is giving us an edge as we offer the customers the option to choose their basket from multiple stores. We are giving services to suppliers as well with respect to enhancing their system in terms of organization and inventory management. We are working like partners with them.
What is the future growth scenario that the industry would witness? What are Qareeb’s plans for the future? Any market niches that you feel will be filled going forward?
We are working on expanding into different geographical locations and adding more product categories. One of our major successes has been in expanding in Pakistan with another Co Founder, Mr. Haris Shahzad who had vast experience in grocery with Instashop in UAE. We are building a model wherein we will be exporting and importing the products from the countries we are currently operating in. For instance some special products would be imported from Pakistan to Saudi and some products will be exported from Saudi to Pakistan. Secondly we are giving special solutions to wholesale. We are getting a niche in the b2b wholesale category. There is still a big gap in the market which is expected to be filled by the entrance of foreign companies in future.
What are success factors for a company operating in Online Grocery Space in Saudi?
The price consciousness has become a very important factor for the customers. Therefore the supply and procurement & pricing of products need to be well managed. The backbone which is the logistics and ontime fulfillment of orders needs to be very well taken care of. Companies can’t afford to mess in that area as it could lead to losses in the long run.
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