Optimizing Last-Mile Fulfillment for FMCG Businesses in the Middle East

Jul 26•8 min read

Lakshmi D

Key Takeaways

E-commerce adoption in MENA is accelerating rapidly, with smartphone penetration expected to reach 92% by 2030, driving significant changes in consumer shopping behavior and retail business models.
Address verification challenges in the Middle East cost retailers over $7.42 billion in e-commerce revenue, with mixed Arabic-English text and poorly written addresses causing significant delivery delays.
Route restrictions and time-based vehicle constraints in major Middle Eastern cities create complex logistics challenges, requiring sophisticated planning to maintain efficient delivery operations.
Locus’ AI-powered solutions address MENA’s unique challenges through precise address geocoding, dynamic route optimization, and real-time fleet tracking capabilities, enabling efficient and predictable last-mile deliveries.

In 2019, Bain & Co. predicted that the retail industry in the Middle East and North Africa (MENA) is on the verge of a pivotal shift. “E-commerce is becoming a reality,” the management consulting company stated, “reinventing consumers’ path to purchase, forming new customer experiences, disrupting business models, and creating growth opportunities for large and small retailers as well as for a new generation of pure E-commerce players.”

Historically, consumer goods shopping was restricted to in-store visits to supermarkets or malls in the Middle East. Strong reliance on face-to-face shopping and loyalty to cash transactions are the primary reasons MENA has been relatively slow in adopting E-commerce. But the shopping dynamics have changed in this region.

A recent report predicts that by 2030, the share of smartphone connections in the Middle East and North African (MENA) regions will reach 92 percent from 76 percent in 2022. The rising smartphone penetration has pushed traditional Middle Eastern shoppers to explore online buying options and conventional FMCG sellers to expand their offerings beyond in-store sales.

Omnichannel is the Way Forward for FMCG businesses

Online shopping of essentials, groceries, consumer goods, food, and beverages is the new normal now, and businesses across FMCG, retail, and grocery markets in the Middle East have realized that it’s high time to adopt omnichannel selling too. Supermarkets and grocers across the region now sell their products on digital platforms. Some have introduced on-demand delivery services to cater to home-stuck consumers’ rising demands for groceries and prepared meal delivery.

Locus’ Guide To Omnichannel Fulfillment. Download WhitePaper Now!

Furthermore, several household shopping apps have come up in the MENA region, allowing customers to place home delivery orders for groceries and other consumer essential goods using smartphones. Food delivery platforms like Deliveroo and Otlob in Egypt and Careem NOW in Saudi Arabia have also started offering groceries on their platforms alongside their roster of meals from restaurants. Also, large-scale consumer goods brands are eyeing increasing revenues by introducing Direct-to-Consumer selling options.

There is massive pressure on FMCG retailers and etailers to deliver goods faster than competitors like never before.

This indicates that greater emphasis is now on ensuring smooth and fast last-mile fulfillment to the customers to offer a positive shopping experience and maintain brand loyalty. As its name suggests, fast-moving consumer goods should actually ‘move fast’ and reach the end customer in time, without delivery delays or last-mile hiccups.

Challenges in Consumer Goods Distribution

However, the MENA region has its own geographical and logistical challenges that must be overcome to establish efficient last-mile deliveries.

Address verification and mapping are common problems faced by logistics planners. Poorly written addresses and a mix of Arabic and English text make locating addresses on a map difficult. This coupled with high-density on-demand orders, often causes inaccuracy in distribution and takes up the precious time of delivery agents in finding addresses.

A statistics mentions that incorrect addresses can affect more than $7.42 billion of e-commerce revenue in the Middle East. This is around or more than 20% of total e-commerce revenue of $37 billion in 2022 which is humongous. This can make it difficult to plan optimal routes and reach customers on time.

Another major logistical issue in some parts of the Middle East is route restriction. For instance, in Abu Dhabi, trucks with a capacity greater than 6 tonnes cannot travel on certain roads. Additionally, there are some routes, like major highways, where these trucks are not allowed to travel between 6:30 am to 9:00 am and 3:00 pm to 6:00 pm.

Many FMCG brands and supermarkets still rely on pen-and-paper processes for planning daily deliveries and sorting orders. This leads to further inefficiencies and gaps in last-mile fulfillment. Companies also struggle with delivery route restrictions, which lead to delays in planned delivery timings. Across the region, there is also a lack of supply chain visibility and real-time monitoring of on-ground operations, making logistics management even more complicated.

Download Ebook on “The New Fulfillment Models in Logistics and How these will change the last-mile game for Brands“

Locus in MENA’s FMCG Supply Chain

Locus provides various AI and Machine Learning-driven logistics solutions to improve last-mile operations for FMCG enterprises. Locus solutions improve operational, tactical, and strategic decision-making, bringing efficiency, consistency, and transparency to the supply chain.

Accurate Mapping of Addresses

Locus’ proprietary geocoder can convert even the fuzziest and poorly written addresses into precise geographical coordinates on a map. Logistics planners can map huge lists of locations accurately within no time, irrespective of the quality of addresses. Automating address location reduces logistics planning time significantly, improves rider productivity by increasing the number of deliveries per rider, and improves First Attempt Delivery Rates (FADR).

Route Planning and Dispatch Optimization

Consumer goods enterprises and E-commerce retailers deal with hundreds of on-demand orders daily. It is essential to plan delivery routes efficiently while minimizing costs and saving planning time.

Locus’ route planning solution automates route planning and dispatch processes. It provides automated route recommendations based on the type of vehicle, vehicle capacity, traffic, stop duration, delivery time, rider preference, and several other constraints.

The solution also considers several route restrictions such as traffic congestion, weight, volumetric capacities, distance, time slots, skills, locality familiarity, operating hours, and fairness among salespeople. Locus also considers specific route restriction factors while planning delivery routes, allowing businesses to skip restricted roads at specified timings for faster and more efficient delivery.

Locus’ Route Optimization software is also capable of dynamic rerouting and territory-based route planning, helping manage on-demand orders optimally. Route Optimization allows companies to reduce the number of vehicles needed and reduce the distance traveled for all the vehicles.

Greater Last-Mile Visibility

Managing the fleet in real-time is an essential part of logistics management for FMCG enterprises to ensure timely deliveries and avoid unnecessary delays. Locus offers businesses an interactive Cloud-based fleet tracking solution with features like live dashboard views, predictive alerts, and real-time on-ground visibility for logistics managers. It allows them to be on top of delivery operations, take necessary actions in case of deviation from planned routes, and keep track of worker productivity. The live-view tracking feature offers customers order status and Expected Time of Arrival (ETA), enabling them to track orders in real-time and be aware of who is handling their order.

Say the business partners with a third-party delivery company to outsource its deliveries. Can it get good visibility into its delivery operations by using Locus’ offerings? The answer is a definite yes.

Locus’ Shipflex enables businesses to automate the carrier selection process based on different rule selection criteria for each order. Beyond this, it helps companies to obtain a branded tracking experience even if they have partnered with a third-party delivery company. This kind of tracking experience makes it easy to monitor the third-party delivery operations seamlessly and act upon them at critical times like exceptions, Service Level Agreement (SLA) breaches, or route deviations.

Make last-mile fulfillment efficient, delightful, and predictable with Locus’ Customer experience and dispatch management platform

How do I make my last-mile fulfillment efficient, delightful, and predictable? This question wavers in the minds of business leaders and decision-makers in the Middle East region. Investing in logistics technology is the primary and significant step to optimize last-mile order fulfillment.

Supply chain and logistics technology such as route optimization, dispatch automation, and real-time fleet management software are transforming last-mile operations for supply chain businesses worldwide. It is high time for companies in the Middle East to adopt tech to support the last-mile distribution of consumer goods and elevate the end customer experience.

One technology that helps businesses maximize their ROI potential is Locus’ customer experience and dispatch management platform. With Locus’ customer experience and dispatch management platform, companies can make their last-mile fulfillment efficient, delightful, and predictable. Its features like Geocoding, real-time tracking, delivery orchestration, and route planning improve your efficiency levels and make the customers’ delivery experience more delightful. Most importantly, it enables businesses to consistently deliver orders to customers on time at the first attempt. This makes deliveries more predictable and trustworthy and improves the brand loyalty of your business.

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References:

https://www.statista.com/statistics/1190173/mena-smartphone-penetration-rate-forecast/
https://www.statista.com/statistics/1279369/delivery-time-expectation-online-shoppers-worldwide/
https://www.logisticsmiddleeast.com/logistics/do-you-know-the-impact-and-cost-of-inaccurate-addresses-to-your-business
https://www.zawya.com/en/business/retail-and-consumer/mena-e-commerce-market-to-grow-to-57bln-by-2026-xv2sp729