LONDON: Aramex is banking on e-commerce revenues to underpin its business in the Middle East and beyond, with online shopping in the Gulf set to witness exponential growth in the coming years.
Strong growth in cross-border e-commerce saw the courier firm’s international express business grow by 10 percent year on year to 500 million dirhams ($136.1 million) during the first quarter of the year, the company said in a statement on the Dubai stock exchange.
Growth was particularly strong in the GCC and Europe over the period, said Aramex.
The e-commerce market in the Gulf is forecast to rise to $20 billion by 2020 — with Saudi Arabia’ accounting for 42 percent of this figure — from just $5.3 billion in 2015, according to forecasts from management consultants A.T. Kearney.
The region’s online shopping sector remains small by international standards, according to the consultants, due to historic lack of awareness of online platforms, limited offerings, and trust issues around fraud and cybercrime.
But the sector received a significant boost last year with the acquisition of regional e-commerce platform Souq by Amazon, and the launch of noon.com by Emaar chairman Mohammed Alabbar in conjunction with Saudi Arabia’s Public Investment Fund.
Rising domestic e-commerce activity in the GCC and Africa boosted Aramex’s domestic express business last quarter, with revenues rising 9 percent to 265 million dirhams.
The region’s largest delivery and logistics firm’s profits attributable to shareholders rose 12.1 percent year on year to 103 million dirhams, with revenues rising 7.6 percent to 1.2 billion dirhams over the same period.
“We had a good start in the first quarter of 2018, launching several strategic initiatives to support future growth and enhancing our operational efficiencies, expanding last mile capacity and accelerating our digital transformation journey,” said Aramex’s CEO Bashar Obeid.
Aramex began adopting a variable last-mile delivery model in 2017 in a bid to cap operating expenses, even as such a move placed pressure on margins in its domestic express business.
“In Q1 2018 we continued to focus on redesigning our operations and creating a more efficient and customer-centric business model,” said the company’s chief commercial officer Iyad Kamal.
