Artificial Intelligence Enabled Dropshipping in MENA
Artificial intelligence, once existing only in the imagination of great writers such as Isaac Asimov, has now become a reality we take for granted. Leaving aside the pessimistic views of those who fear robots and automation, the truth is AI is a real game changer and enabler for governments, businesses and start-ups.
E-commerce and related industries such as dropshipping have benefitted in unimaginable ways from the breakthroughs in AI. I was first introduced to dropshipping start-ups when I wanted to purchase a newly published book from Amazon. Perhaps unsurprisingly, the merchant did not support shipping to Egypt. It is not uncommon to find friends on social media asking who is able to bring difficult-to-obtain items from outside of Egypt. Such demand in the market has offered a brilliant niche for entrepreneurs.
What is Dropshipping?
Dropshipping is the term used when a merchant no longer keeps certain products in stock but purchases them only upon request and ships them to his customers’ doors.
By contrast with the classic supply chain this is a very viable business model, minimizing risk and cost. The merchant does not have to worry about inventory management and maintenance or pay extra for logistics related to shipping and storage, though this comes at the cost of a minor reduction in profit margins.
Dropshipping is one of the few business models where you don’t have to spend money before a customer actually pays you, so it is favoured by self-funding start-ups.
The Internet and the advent of e-commerce allowed a plethora of web and mobile applications to emerge. Amazon, Ebay and AliBaba became pioneering global e-commerce websites, diversifying to incorporate not only e-commerce, but robotics, cloud, and payment services.
Now it is easier than ever for newcomers to start an e-store and keep it running at a minimum recurring cost. However, start-ups must still innovate when it comes to the brand, quality, and user experience, to compete with large retailers and megastores.
The User Experience
Such breakthroughs and disruptive technological advances have shaped the mindset of customers in the new millennium. Nowadays customers are not satisfied with a website that merely allows them to shop online. The usability of the applications, either web or mobile, drives their conversion rates. The valuation of these digital businesses is closely bound to their ability to keep their customers engaged with their systems through e-mails, SMSs, push notifications and call centers. Loyalty programs such as gift cards, coupons, vouchers and promo codes entice customers into buying more.
Even though entrepreneurs like Ronaldo Mouchawar founded Souq.com and pioneered the e-commerce industry in the MENA region, there was still a gap for many years when it came to importing very well-known brands.
So intimidating was the challenge that even giants like Amazon, Ebay and AliBaba dared not take the risk. Successful product delivery necessitated an existing supply chain and logistics on the ground in the region. This alone was motivation for Amazon to recently acquire Souq.com and take advantage of its existing ecosystem.
Still, a few start-ups have penetrated the market when it comes to imported products. Websites like Edfa3ly, Lynks, Eshtereely, BorderLinx, ShopUSA, MyUS and MartMax allow a customer to copy the hyperlink of the desired product to their website. The product data is automatically retrieved from the original retailer.
I believe that this is where advancements in Natural Language Processing – a field of AI – could be incorporated to allow the systems to glean more information about the product. It seems none of these start-ups have yet done this, but I believe it to be a very viable application of AI that could boost the user experience.
In March 2017, BorderLinx signed a partnership with Vestiaire Collective which would ensure the growth of BorderLinx and offer Vestiaire Collective an enhanced logistical network, to reach more customers and increase customer engagement. I personally believe that BorderLinx is making use of an AI system that enables them to automatically classify and generate Harmonic System Codes (HS) for newly added products. This is just one way of enhancing existing dropshipping online solutions, to deal with a dynamic product database. This is where automation comes in handy at scale.
Later in April 2017, BorderLinx teamed up with ELOQUII, the influential fashion retailer. Together they plan to provide a unique user experience across borders.
Edfa3ly was first launched in 2010 with a self-funding budget of roughly USD $20,000. It blossomed during the Arab Spring. In 2013, Edfa3ly raised two rounds of funding, totalling around $150,000.
Recently Lynks was featured on a popular local TV show. The show is the first televised on-air competition for Egyptian start-ups, hosted by Lamis El Hadidi. Lynks continues to diligently add new features, such as live bidding and premium subscriptions, to their platform. Moreover, they offer a lot of promo codes for discounts through their social media channels.
MartMax is a newcomer and hence expected to take advantage of recent breakthroughs in technology, while building its platform and making use of a thriving and stabilized market.
The Future is Now
Artificial intelligence is a term that is causing a buzz and it seems it won’t cease disrupting the status quo in the near future. Amazon were pioneers within the global e-commerce industry by introducing machine learning-based product suggestions to customers. Such suggestions are based on predictive analytics, performed on innumerable customer records and interactions with Amazon’s system stored over time. AI boosts the conversion rates of customers by making the products in which they are most likely to be interested in easily accessible.
Customer Relation Management (CRM) tools, crucial to the sustainability of such businesses, also benefit from machine learning algorithms. A major Key Performance Indicator (KPI) for such systems is response time. So a classification algorithm is used to map customer requests and complaints and convey this information directly to the support team in charge of customer requests. Even though it may seem an obvious step, the intervention of intelligent machines saves businesses a lot of time when applied at scale. Even a one millisecond delay in e-commerce can affect sales negatively by 1%.
Artificial Intelligence empowers businesses with intelligent routing and by scheduling algorithms to optimize resources, logistics and shipping. By minimizing the cost, time and effort, maximizing revenues and above all giving customers a user-friendly experience, AI truly promises to be the wave of the future, taking us into a new era.
Before you embark on your dropshipping experience as a customer, there is a chance that you are now also considering starting your own dropshipping business. Believe it or not, it is easier than you may think, using Shopify and Oberlo.
See you featured in start-up news.