Gulf delivery companies innovate to go the last mile

How logistics companies in the Middle East are investing in technological upgrades to meet consumer demand for ever faster deliveries

Today’s consumers increasingly expect cheap—or, better still, free—and fast delivery, especially in e-commerce, food and retail industries. In response, companies are investing to improve efficiency and cut costs in order to fund their shipping logistics. Last mile delivery—when goods are moved from a transportation hub to their final destination, such as a personal residence or retail store—is the most critical, and indeed expensive, leg of the journey, but technology optimisation is providing solutions to challenges and giving companies a competitive advantage.

Statista predicts the fast-growing and highly competitive last mile delivery sector will be worth over US$200 billion globally by 2027. Turkish startup company Getir is among those leading the way, having recently raised almost $800 million in a Series E funding round, an investment led by the Emirates’ Mubadala sovereign wealth fund and the Abu Dhabi Growth Fund. Getir has since been valued at almost $12 billion.

E-commerce growth in the UAE 

Mirek Gral, vice president of Last Mile Experts, a business consultancy focused on the last mile industry, said: “Last mile delivery has gained popularity over the past few years due to the explosion in e-commerce volumes, which require capacity and customer-centric features in the last mile. From a regional perspective, MENA is the world’s second fastest growing market of e-commerce.”

The total value of e-commerce in the UAE reached just over $5 billion in 2021 and is anticipated to surpass $8 billion by 2025, according to a Euromonitor International report released this March.

Gral added: “The e-commerce market keeps on growing at a high speed with an expectation to continue post-pandemic. This means that the last mile delivery sector needs to keep up, as e-commerce is fundamentally dependent on this capability.”.

Gulf logistics start-ups invest in tech 

The UAE is rising to the challenge, having successfully attracted last mile startups that are leveraging technology to increase the efficiency of deliveries: Interactive Delivery Management software, route optimisation tools, and out-of-home delivery capabilities such as secure lockers are all key to ensuring delivery keeps pace with demand.

While not yet approaching the scale of Getir’s operation, these startups are already raising the venture capital needed to compete in the industry. Late last year, UAE-based logistics and delivery firm iMile raised $40m in a Series A funding round. Meanwhile, other native players such as Noon are driving the industry forward, for example by testing automated, driverless deliveries.

Delivery sector attracts venture capital

Venture capital cash is allowing last mile companies like Getir to aggressively consolidate control of the markets such as the UK – even though Bloomberg has predicted it could lose more than $1billion in 2022. Getir has recently acquired UK on-demand supermarket company Weezy to help meet its 15-minute delivery promise by taking advantage of Weezy’s network of ‘dark stores’, the term used for retail outlets or distribution warehouses that cater exclusively for online shopping.

Gary Wazir, CEO of Wystle, a London-based transport technology company, said: “Venture capital is supporting last mile startups with cash for growth, and expertise. While some could get it wrong, investors are confident of the delivery sector’s growth.”

Wazir cited as an example Amazon’s 2020 foray into the pharmaceutical industry, tipped by Citi Research analysts as a disruption to the pharmacy system and “competitive threat that will likely shift scripts away from the retail channel.”

Wazir said: “Crisis and innovation always go together. Delivery services have existed for some time but the nature, speed, and demand are changing. Where once we waited a day or days, it’s now hours or even minutes. Had there not been a pandemic, the need for such innovation would not be so pressing in the last mile delivery sector.”