Awok.com: Building an e-com eco-system
The e-commerce market in the Middle East, and UAE especially, is undergoing rapid growth and transformation. Mergers and acquisitions have become common, with Amazon.com buying Souq.com, Jadopado.com being acquired by a technology fund led by billionaire Mohamed Alabbar, and the recent launch of the US $1-billion noon.com.
Before all this, however, there was AWOK.com. Founded in 2013, it entered the market with a mission to make day-to-day consumables more accessible to the UAE consumer market.
By 2015, its sales had tripled, and in 2017 it expanded beyond the UAE into Saudi Arabia, with plans to enter the wider GCC by the end of 2019, while simultaneously introducing same-day delivery in the UAE and KSA.
For Ulugbek Yuldashev, the founder and CEO of awok.com, the entry of new online shopping platforms isn’t a concern. In fact, he welcomes it. “We faced multiple challenges in terms of logistics when we first set up. Fulfilment and delivery systems and infrastructure had to be built from scratch because there was no real e-commerce ecosystem,” he tells Logistics Middle East. “The 3PLs that we were dealing with said it would take 7 to 13 days to deliver a product within the UAE.”
This was unacceptable to awok.com, so Yuldashev opened his own fulfilment centre and developed his own last mile delivery operation. Five years later, awok.com has more than 3 million registered users — 75 percent of whom are repeat customers — and more than a million products delivered every month in the UAE alone. The e-commerce platform operates two distribution centres in Dubai, with a new one opened in Saudi Arabia in September, and has only recently started to work with 3PLs to support its operations.
“We are now working with specialist 3PLs that can support our mission to deliver faster and more efficiently,” says Yuldashev. “Around 20% of our products are delivered through a 3PL courier, we have four partners in the local market, and the other 80% we’re doing in-house. 3PLs have invested heavily in the last mile and they’re now able to offer a service almost as quick as ours.”
For Yuldashev, this exemplifies the importance of developing an eco-system for e-commerce logistics operations. “The 3PLs we work with are heavily trained for the specifics of our business and they have a very high delivery success rate,” he says. “We’re now looking to grow our reliance on 3PL partners, we’re giving them full access to our system to enhance the efficiency of the deliveries. It comes down to data, you have to share data to achieve success in a partnership with 3PLs. It’s more cost-efficient to use a 3PL and it also grows the eco-system.”
Supporting growth in the e-commerce eco-system is important to awok.com, because it’s the only way to make cross-border operations economically feasible, says Yuldashev. “If you don’t grow the eco-system it becomes difficult to expand cross-border operations to new markets and by growing the eco-system you’re also enhancing the penetration of online sales, which will benefit us in the long run.”
This is why Yuldashev welcomes the entry of new e-com players to the market. “It’s what the eco-system needs. It benefits the consumer and the local infrastructure for e-commerce operations,” he says. “This is why when you compare the UAE to other regional economies, the penetration here is double. We’ll stay ahead of the competition by focusing on our existing customer base and implementing new technologies to enhance our logistics, make it more efficient and invest in multiple quality control points to ensure customers are never unhappy with our service.”
Yuldashev plans to stay ahead of the competition then by maintaining a relentless focus on the integrity of his logistics operation. A huge part of this is the company’s WMS, which was developed in-house, because nothing else on the market could give Yuldashev the functionality and scalability that he needed. “The design and set up of a warehouse for e-commerce logistics needs to be completely different to your standard 3PL. A 3PL will have products in bulk storage, but we have single storage in addition to bulk storage for picking efficiency,” he explains. “We also have to receive, pack, dispatch and constantly monitor quality when selling goods on behalf of a merchant.”
Because of this, awok.com uses a random storage system with different types of products scattered around the warehouse. “That random order of storage is decided by the WMS which has a recommendation engine,” says Yuldashev. “However, for some products, such as an iPhone and iPhone covers, they may be stored close together because the system knows that these products are typically bought together. Then for picking we use an in-house app on our handheld devices that monitors where each picker is and tells them where to go when an order is made.”
The WMS uses multiple data sources to decide on the random order for the warehouse. It uses historical sales data for existing SKUs as well as customer interest trends for the new SKUS, because awok.com adds about 1,000 SKUs with no previous sales data every day. Through this random storage system, awok.com is able to pick and dispatch goods within 18 minutes of an order being placed.
“Our WMS is cloud-based so its linked with both our distribution centres in Dubai and will also be integrated with the new DC that we’re building in Saudi Arabia,” says Yuldashev. The new DC in Saudi Arabia was launched as this issue of Logistics Middle East went to print, part of awok.com’s strategy to grow further in the GCC. “Before the end of the year we’ll be expanding into new GCC markets, so we’ll need to consider a presence in a freezone to handle cross-border operations.”
The company’s DCs are currently located on-shore to avoid import and export levies, but Yuldashev feels that freezones in the region are beginning to acknowledge the growth in e-commerce, and the specific logistics needs of e-commerce platforms. “Jebel Ali and Dubai South are considering separate regulations and processes for e-commerce companies, but as of now there hasn’t been much clarification on what changes they’ll be making,” he says.
Automation is another area that awok.com is considering for future efficiencies. “We also want to bring in same-day delivery, and even delivery within two hours, and for this the use of big data and AI will become extremely important. Essentially, we’ll be getting products ready for delivery before they’re even sold,” says Yuldashev. For this awok.com will need an upgraded WMS, as well as automation in the packaging and sorting of products.
“The main challenge for automation in e-commerce is only in the picking stage, when the items are all different sizes and shapes. But once it’s packed, you can use standardised boxes for different items and so automation in packing, sorting and dispatching is easier,” explains Yuldashev. “This same-day technology is being put in place and tested now, and hopefully by the middle of 2019 we’ll be able to introduce that.”