E-Commerce Strategy in the United Arab Emirates

Introduction

E-commerce is gaining popularity in the United Arab Emirates, and many firms are now taking advantage of internet technology to reach out to customers. According to Smith (78), the government of the United Arab Emirates has been supporting the growth of information technology both financially and morally. As a result of this support, many e-commerce firms have emerged to take advantage of the new market platform that promises business entities a lot of potential. One of the e-commerce companies that were founded in the recent past is Aido. It is a retail company that acts as a shopping destination for customers in the cities of Dubai and Abu Dhabi.

It allows its customers to make online payments for the products available in its stores. Once the payment is made, the product is delivered to the customer without charging any additional costs. Most of the products offered by this firm include books, mobile phones, tablets, gifts, toys, electronics, and computers. The company has experienced an impressive growth in sales volume over the past two years due to its effective business models and strategies. This paper will analyze online business strategies and models that this firm has been using.

Business Strategy

Business strategy refers to long-term business plans that an organization intends to use to achieve success in the market. It is necessary to evaluate vision and mission statement of Aido to help understand its business strategy. The vision statement of Aido emphasizes on the need for the firm to become the leading online retail store in the Middle East. The mission statement reiterates the commitment of the company to offer quality services to its customers consistently and in a manner that meets their expectations. The mission statement explains what the top managers and all the employees at Aido will do to help it achieve its vision in the regional market. It offers a clear roadmap for sustainable profitability. The management of this firm has set a clear business strategy that can be summarized in the figure below.

Success Strategy.
Figure 1: Success Strategy.

As shown in the illustration above, success strategy at Aido emphasizes on six pillars. The first pillar is the need for teamwork. At Aido, the stakeholders appreciate that it may not be easy to achieve success without a team spirit. All the employees at the firm consider themselves as members of a team, each with specific responsibilities. This strategy helps in eliminating internal wrangles, overlaps, or complaints. The second pillar is innovation. This firm knows that it is operating in an extremely competitive business environment. The only way of managing this competition is to be innovative. It has been revealed to the researcher that Aido’s management is very supportive of innovative ideas coming from its members. It is one of the reasons why this firm has remained successful over the recent past.

The vision of this company has been acting as its strength towards achieving success in the market. The aim of the firm is to become the leading online retail store in the Middle East. The top managers know that the company has to be unique in its business strategies to achieve this vision. That is why it has developed a unique leadership structure. At Aido, top managers consider themselves leaders who have to work together with the junior employees to achieve the objectives set by the business founders.

There is an open policy of communication that allows the managers and junior employees to share their ideas freely without any fear of intimidation. In many instances, transformational leadership model is applied by the top managers to motivate the junior employees to achieve greater success. Inspiration and motivation are the last two pillars that are closely related to the pillar of leadership. The top managers of Aido appreciate the fact that all the stakeholders, including employees and customers, need to be inspired and motivated to remain committed to this firm. These are some of the main business strategies that have helped in increasing the revenues of this company.

According to Palmer (67), when defining a business strategy, it is also vital for a firm to focus on the range of products offered on the market. The range of products that a company decides to offer may define its ability to achieve success in the marketplace. E-marketing is different from brick-and-mortar marketing hence it is important to be as precise as possible when defining product offering. At Aido, it is apparent that the management focused on electronics and related products which are not perishable. One of the reasons that informed this decision was the limited space to store the products.

This firm acts as a link between the suppliers and customers. Once a client makes an order, the product must be delivered within the shortest time possible. The vehicles that are used to transport the products also act as retail stores. The choice of products fits well in this unique context. It also offers it a competitive edge over firms operating under brick-and-mortar business model because the high cost of renting stores is eliminated.

Business Model

It is also necessary to analyze the business model that Aido is using to penetrate the competitive retail market in the United Arab Emirates. Palmer (23) defines a business model as “Rationale of how a firm creates, delivers, and captures value in economic, social, cultural or other contexts.” According to Meier and Stormer (98), managing an online business needs a properly defined business strategy. The figure below shows the business model that this firm is currently using to gain profits.

Business Model.
Figure 2: Business Model.

The unique business model of Aido summarized in the figure above is relatively similar to a conventional online business model. It starts with the identification of the market needs. According to Ulirio (121), the number of young adults in gainful employments in the Middle East has been increasing over the past two decades. This increase is attributed to the high number of women who can now go through formal education and get employments in institutions previously seen as a preserve of men. These young adults are the leading consumers of electronic products. It explains why Aido has made the decision to enter into this market. After an intensive market research, this firm realized that there was a gap in the market that could best be covered by an e-commerce platform.

After identifying the market needs, the next step is to identify the right suppliers of a given product. The primary target market for Aido is the middle class, who are aged below 45 years. This market segment can easily be found online. Their tight schedule also makes them a desirable market segment. However, they are very sensitive to the quality of products they purchase. According to Smith (45), the middle class is always obsessed with the issue of brand.

They buy a brand, and it forces retailers to ensure that the popular brands are available in their stores. Aido knows very well that when it comes to electronics, the locals only trust a few top brands such as Apple, Samsung, Sony, HTC, HP, among others. In many instances, customers will specify the brand they need. In case they do not state the brand, the representatives of this firm will avail many alternatives for them.

The principal objective of Aido is to offer its customers superior products to make sustainable profits. To earn profits, it is necessary for it to develop a unique business model that will enable it to buy products at low prices and sell them at the current market prices. As Adi (74) notes, online firms are under pressure to ensure that their products prices do not exceed the average market prices. For that reason, it is important for Aido to ensure that it offers its customers acceptable prices for all its products. It is important to negotiate the prices with the suppliers. The ability of the firm to make profits depends on the capacity to convince the suppliers to offer them the products at low prices. The top management of Aido has been keen on getting the best deals with the suppliers in terms of pricing.

Once the prices have been negotiated, the products will be made available in the company’s website to inform customers that they can make online purchases. At its website, the firm only sells products that are available and whose prices have been agreed upon. It helps to avoid inconveniences to the customers. It eliminates instances where a customer makes an order only to be informed that the product is not available.

The last stage in this business model is the delivery of products to customers once the sale agreement is concluded. In this business model, the customer will visit the online store to choose a product of interest. The customer will be expected to make payments for the product in an online platform. Once the payment is made, Aido dispatches the products using any of its vans that are strategically located within the cities of Dubai and Abu Dhabi.

Marketing Strategy

E-commerce platform has eliminated many barriers to trade that many business start-ups faced in the past. It is now easy to start a retail store even without owning a physical store. It has increased the level of market competition. For Aido to withstand the current and future market rivals, it needs an effective marketing strategy. The target market has been identified as the middle class. Aido uses the model below to define its marketing strategy.

Marketing Strategy.
Figure 3: Marketing Strategy. Source (Guo 113)

The first step in developing a winning business strategy is to understand the customers. It involves understanding their needs, tastes and preferences, age, financial capacity, and any other relevant information that can help in delivering superior services to them. In the United Arab Emirates, the issue of religion may also be a factor when analyzing the buyers. The second step is to analyze the market. This analysis entails determining the market size, geographic location of the customers, and the existing structures that can support the operations in the industry. The geographic location of the customers helps the firm to determine the ease with which products can be delivered to the customers once they make purchases.

The third step is to analyze market competition. The level of market competition defines the strategy that a firm takes to attract and retain its customers (Meier and Stormer 116). The United Arab Emirates has seen an emergence of online firms offering an array of products. Aido is forced to come up with a strategy that will help edge out its current competitors. The firm is currently using non-pricing competitive strategies such as unique packaging and on-time product delivery. The fourth step is to conduct a research distribution. It involves finding the cheapest distribution strategies for the firm. The firm will have to weigh the cost of hiring vans against the cost of purchasing them. Defining the marketing mix is also part of the strategy, but it spreads across these seven stages of the plan.

The sixth stage involves financial analysis that involves many of processes. First, the firm will analyze the total cost of delivering a unit product to the customers. The cost includes the price of the product from the suppliers, transportation, value- added cost, and labor involved at all the stages. The company then evaluates the revenue per unit product to determine the profit. The profit should sustain the operations of the firm. The final stage involves the review of the whole process in order to identify any gaps that may need to be addressed. In the review process, the management works with the junior employees to determine how the systems within the firm can be improved to deliver quality value.

Revenue Model

According to Gerber (72), revenue model refers to “A framework for generating revenues.” At Aido, the primary source of income is its online customers who purchase the products regularly. The figure below is a conventional revenue model that can apply to this online company.

Conventional Revenue Model.
Figure 4: Conventional Revenue Model. Source (Gerber 54)

As shown in the model above, the first stage in the revenue model is to satisfy the existing needs. Aido currently satisfies the need for electronic products to the middle-class customers in the United Arab Emirates. In exchange, customers will pay prices that will leave this firm with sustainable profits. The next step is to come up with a brand. A strong brand will help to market a firm in the face of stiff market competition. The brand name this firm is currently using is Aido.com. The management is aggressively promoting this brand to strengthen its position in the Emirati market. The third stage in the revenue model is to determine the appropriate selling strategy. The strategy can be online, offline, or both. Aido is using the online platform.

Conclusion

E-commerce is gaining popularity in Emirati retailing market. Aido is one of the firms that have taken advantage of this new platform to offer customers in the United Arab Emirates a unique online shopping experience. The website targets the middle class with electronic products that are delivered to their desired destinations once the payment is made. The marketing strategy it uses has enabled it to withstand stiff market competition from the firms operating in the same industry.

Works Cited

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Gerber, Michael. The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It. New York: Harper Business, 2013. Print.

Guo, Yimeei. Research on Selected China’s Legal Issues of E-Business. New York: Cengage, 2014. Print.

Meier, Andreas, and Henrik Stormer. E-business & Ecommerce: Managing the Digital Value Chain. Berlin: Springer, 2009. Print.

Palmer, Daniel. Ethical Issues in E-Business: Models and Frameworks. Hershey: Business Science Reference, 2010. Print.

Smith, Joseph. How to Invest, Start and Run Profitable Business in the United Arab Emirates Guide. New Jersey: Wiley & Sons, 2013. Print.

Ulirio, Mohamed. Oman Country Study Guide: Strategic Information and Developments. London: McMillan, 2012. Print.