Setting up logistics for a startup in UAE (A starter Guide)
The UAE kept its lead in the Middle East and Arab region in the World Bank’s Doing Business 2020 with 16th position in the global ranking of 190 countries. According to a special report issued by Visa early 2019, the e-commerce and trading sector is forecast to grow 23 per cent annually till 2022.
For startups dealing in physical products, a smooth logistics process is essential before rolling out products to the market. Good logistics is more than just a process of transferring products, materials, components to different places. It is the key component of a supply chain that makes it easier to get these products and other goods transferred to another destination with proper management. So, it is crucial that businesses have a proper setup in place that can help them get their products transferred from suppliers through the airport, seaport, customs and finally (if it is being sourced elsewhere) to their customers without hindrance.
Priorities of The Logistics Process
As a startup, you might not think about the logistics process on a daily basis but you are influenced by it each and every day. Over 90% of the goods around you (especially in the Middle East) are imported from outside the country through a complicated web of multiple entities from origin to destination. Online stores offer a wide range of products on a regular basis but the entire process of it is completely dependent on logistics. If you are part of this e-commerce chain, then your process needs to be able to support demand.
The first thing that comes to the mind of your customer while purchasing any product is how quickly you can have it, whether it is in stock or not? And yes, the shipping price to get the product to their doorstep. These are the logistics priorities with the needs of the customers in mind. Right from the speed of getting it delivered to keeping the rates minimum, logistics always works upon these priorities. In reality, the faster you need to expedite the delivery process, the higher the charges are.
When it comes to startups, some do not have the inventory stocked in UAE. Drop shipment business is on the rise. This helps business/ web store fronts to make a sale without physically having the goods in UAE. Usually in such cases, the products would be stored in hubs that could be based in the county of manufacture, and as and when a sale happens, the item gets shipped from this hub directly to the customer in UAE.
This needs to be done at the lowest expense. However, a small inventory in the initial stages may not be sustainable in the long-term growth of the company. To make sure that a company is fully sustainable and operational, businesses need to have better stocks and use better visibility to optimize and help customers get orders covered more quickly.
Finding the right freight forwarder
As a startup, if you are dealing in small numbers, its fine to deal with each shipment on an ad hoc basis like we mentioned above (drop shipments). But as business grows, the need to have more stocks and a better range of flexibility in your offer. Like the need to change the packaging for valentine’s day or that special promotion during Ramadan for your stocks. At these times, you might need to shift the mode of the shipment from sea to air to keep up with customer expectations. Then, you definitely need to be working with a reliable freight forwarder to make sure your imports are managed and delivered to your warehouse based on agreed terms.
Whether you are an e-commerce or startup building up its brand, you need have full visibility and transparency on your shipments to manage expectations with your end consumers. You also need a reliable freight forwarder to make sure all the customs and clearance are taken care of.
Storage and Value added
Quite often, there are third party logistics companies (commonly referred to as 3PL) that could help you with this complete package including storage and value added services. This could help reduce overheads or the necessity to have your own warehouse.
Last Mile Delivery
With more and more e-commerce and startups setting up shop in UAE, an other important segment of business that’s on the rise is the List mile delivery companies. Startup can partner with last mile delivery companies to make sure the customer orders are picked up from the warehouse/storage facility and delivered to the end consumer at a competitive price.
More Precise Planning
It is vital that you have your logistics planning done with which you can get the products delivered to their places on time, as promised, without any hassles.
There are a lot of compliances for complex products that need prior approval before arriving into UAE like municipality registration, approvals, packaging details with Arabic translation and labeling and many more. These vary according to industries. As you progress in your venture, you will encounter this requirement sooner or later. So it is best to be prepared for this.
It is important you match customer's expectations with 24/7 visibility on your shipping. It is important that you plan according to the needs of the customers and make sure that they get their product delivered without any kind of hassle at all.