Seizing Saudi Arabia’s online grocery shoppers: Majid Al Futtaim expands e-commerce reach

By Tingmin Koe contact

- Last updated on GMT

Through the partnership with Wadi Grocery, Majid Al Futtaim hopes to deliver grocery to consumers in two hours time. ©Getty Images
Through the partnership with Wadi Grocery, Majid Al Futtaim hopes to deliver grocery to consumers in two hours time. ©Getty Images

Related tags: e-commerce, Grocery shopping, Carrefour

Majid Al Futtaim, a Dubai-based conglomerate which operates supermarkets as part of its business, is partnering with online store Wadi Grocery to build its presence in Saudi Arabia’s e-commerce space.

As part of the arrangement, Carrefour - which is owned and managed by Majid Al Futtaim in the Middle East, will be supplying 12,000 grocery and other products for sale on Wadi Grocery.

To help the e-commerce platform grow, Majid Al Futtaim is also investing in Wadi Group, the company which operates Wadi Grocery. The investment is also part of a US$30m funding round meant to drive Wadi Grocery’s growth.

“The money will be applied to all areas of Wadi Grocery’s business with the aim of becoming the leading e-grocery player in KSA,”​ Herve Majidier, Chief Operating Officer for Carrefour Egypt, KSA, Kuwait, Oman, and Bahrain at Majid Al Futtaim Retail said in response to queries from FoodNavigator-Asia​.

The partnership also aims to deliver products to consumers in two hours, which is said to be the “first service of its kind in the Middle East.”

The partnership is part of Majid Al Futtaim's efforts to extend its presence from traditional retail into omni-channels.

“At present, Wadi Grocery is our only third-party e-commerce partner, whereas in the UAE, Egypt, and Lebanon, we operate our own omni-channel offering. We are open to working with other e-commerce platforms in other markets should the right opportunity present itself, viewing such players as complementary to our own service while we continue to extend our unique value proposition to more customers,”​ Majidier added.

Majid Al Futtaim Retail operates 250 Carrefour outlets across 15 countries at present.

Besides building its e-commerce grocery business, it also plans to open 11 new Carrefour hypermarkets and 23 Carrefour supermarkets this year.

Servicing all of Saudi

As part of the arrangement, Wadi Grocery will expand its services in all cities throughout Saudi Arabia where Carrefour operates.

At present, its services are only present in three major cities of Riyadh, Jeddah, and Dammam. It entered the Saudi market last year.

“Saudi Arabia being the largest market in the Gulf Cooperation Council (GCC), combined with its relatively low rate of online/mobile grocery penetration, represents a golden opportunity for our partnership with Wadi Grocery. For now, we’re focused on expanding our operation within the Kingdom, which is a significant task considering its vast landscape,” ​Majidier said.

“Wadi Grocery provides a full ecosystem of enabling services including an in-house ‘last mile’ delivery network, and our investment in the platform will bring us closer to customers where we don’t have physical presence and fulfill their demand more efficiently,” ​Hani Weiss, Chief Executive Officer at Majid Al Futtaim (Retail) added.

Factors for success

A wide, price-competitive range of products, alongside fast and reliable delivery system, were key drivers for success in the e-grocery market, said Ankit Wadhwa, the co-founder and Managing Director of Wadi.

This echoed the results of a report​ published by Ipsos in April this year. The report highlighted the importance of speed and quality for e-grocery to thrive.

In addition, it showed that most online grocery shoppers (43%) would decide on the brands to buy only when visiting the online store, while 29% would already have decided on the brands prior to visiting the store.

In contrast, if shoppers were to buy from brick-and-mortar stores, most – 60% would decide which brands to buy when visiting the store, while only 23% would have made the decision beforehand. 

The Saudi Arabia grocery delivery industry is estimated to be SR$430m (approx USD$114m) in 2016, according to todoorstep.com, an online grocery store. 

Todoorstep, Nana Direct, and Careed are some of the platforms providing online grocery services in Saudi Arabia.

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