Aramex Expands Ecommerce Logistics past Middle East

Aramex is a United Arab Emirates-based delivery and logistics company launched in 1982. It’s found success in serving geographic markets which other providers ignore. While Aramex’s reach was bolstered by acquisitions, its international network is supported mostly by partnerships with other logistics and transport companies around the globe. However, the business is expanding its international footprint through acquisitions in Africa and Southeast Asia.

Aramex is publicly traded on the Dubai Financial Market. It employs 18,000 people in 567 locations in 69 countries and has an alliance network that encompasses 40 independent express delivery firms globally.

While Aramex’s roots are in freight and transportation, ecommerce is currently the major driver of growth in Aramex’s express delivery and logistics industry industries. Aramex also assists ecommerce startups and established companies with supply chain management and transport services in addition to product storage and order fulfillment. Via its partnerships, Aramex can provide online retail platforms and site maintenance. Aramex supports three platforms: Magento, Shopify, and OpenCart.

Becoming an electronic company is a rather recent movement for Aramex, representing the Middle East’s slower adoption of the Web.

However C.E.O. Hussein Hachem sees it as a requirement. In a September interview with internet book CEO Middle East, Hachem said,”It is tough to tell someone that everything that has been done over the past 30 years is fantastic, but it is not good enough for another ten or fifteen decades. That if we do not change at the moment, we won’t weather this storm of disturbance.” He’s exploring a business model where anyone can become an Aramex courier using a flexible program. Aramex also offers franchise opportunities to present transportation and shipping companies in emerging markets.

Financials

Based on Aramex, cross-border ecommerce accounted for 25 percent of its own 2016 annual revenue and is growing at 30 percent. The business is dedicated to serving emerging markets in the Middle East, Africa, and Asia. In 2016, 64 percent of revenue came from the Middle East and Africa, followed by Asia at 20 percent, Europe in 13 percent, and North America at 3%.

 

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Aramex’s 2017 Q3 net profit increased by 13 percent to AED (United Arab Emirates Dirham) 81.6 million, up from AED 72.2 million in Q3 2016. However, the profit growth came in below the forecast of AED 87.8 million in the EFG-Hermes investment company. Earnings in the third quarter also increased to AED 1.14 billion, up by 9 percent over AED 1.05 billion in Q3 2016. However, for the nine-month period ending September 30, 2017, net profit dropped 8 percent in the third quarter in 2016, from AED 294,765 to 270,378.

Emerging Markets

Aramex’s strategy is to focus on underserved emerging markets — nations often overlooked by bigger logistics and shipping firms. Geographical regions that Aramex targets are: sub-Saharan Africa, smaller nations in Southeast Asia, Australia, and New Zealand.

Aramex’s home market, the Middle East, doesn’t create much outgoing cross-border ecommerce but rich Middle East residents do purchase products online from Asia and Europe. There’s also a burgeoning domestic market with local players like Souq.com (a market recently bought by Amazon), Wadi.com (another market ), and Ora La Moda (a retail style startup). Recently established market Noon.com is currently operating only in the UAE but will soon expand into other countries.

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Innovation

Many countries in the Middle East do not have formal speech systems, making package delivery hard. In those countries with street addresses, postal codes tend to be non-existent. Similar issues exist in several African countries. To succeed under these conditions, Aramex offers innovative and personalized logistical solutions.

It recently ran an experiment in Dubai to gauge the efficacy of deliveries to regular street addresses versus three word addresses offered by alternative addressing system What3words. The British firm developed a system which divides the world into a grid of 3-meter squares and assigned each one a special address comprised of only three words. The system is available through a mobile application in addition to online. Aramex’s trial of 100 deliveries with three word addresses was 42 percent quicker and reduced the entire distance travelled by delivery drivers by 22 percent.

Aramex will continue to focus on emerging markets in which there is limited competition. It has positioned itself well as an efficient logistics and transport supplier in challenging environments. While it probably will not have European or North American market share, it is going to continue to dominate in the Middle East and Africa.

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