Out-of-Home Delivery: Unlocking E-commerce Growth in GCC Countries

The rapid growth of e-commerce in the Gulf Cooperation Council (GCC) countries has presented exciting opportunities and challenges for the logistics industry. As these nations experience significant socio-economic development and boast a young, tech-savvy population, it becomes imperative to establish efficient last-mile delivery networks. One potential solution that has gained traction globally is out-of-home delivery, leveraging parcel machines and pickup points. In this article, I explore the current state of these solutions in the GCC region, with a particular focus on Saudi Arabia, and the potential they hold for supporting e-commerce growth and ensuring sustainable logistics.

A Growing Market, Yet Immature:

In 2016, the first announcements of the construction of delivery networks, including parcel machines, surfaced in the Middle East. Since then, regional and local leaders in GCC countries have taken steps to invest in pilot programs for the parcel machine network. Furthermore, numerous start-ups have emerged in Saudi Arabia, establishing their independent and open networks.

While progress has been made, it is essential to acknowledge that out-of-home delivery solutions are still relatively immature in the GCC region. A comparison with more developed countries reveals a significant disparity. Countries like Estonia and Finland boast over 10 machines per 10,000 inhabitants, while countries like France and Germany have 13 pickup points per 10,000 inhabitants. In contrast, the GCC region, including Saudi Arabia, stands at a mere 0.09 machines and 0.8 pickup points per 10,000 inhabitants. These figures highlight the vast untapped potential that exists within the region.

The Road to Maturity:

In Last Mile Experts we estimate that a minimum viable density for a parcel machine network is at least one machine per 10,000 inhabitants. Unfortunately, the current networks in the GCC countries fall significantly short of this benchmark. The popularity of parcel machines remains negligible, with conversations with operators confirming low utilization rates, often ranging from several to over a dozen percent.

However, the promising outlook for the GCC countries lies in their large, young population and fast-developing societies. As e-commerce continues to flourish, there is a growing need for sustainable last-mile delivery solutions. Out-of-home delivery, with its convenience and accessibility, presents a viable solution to bridge the gap between e-commerce growth and efficient logistics.

Unlocking E-commerce Growth:

With the right investments and strategic partnerships, GCC countries can accelerate the development of their out-of-home delivery infrastructure. Increasing the density of parcel machines and pickup points would result in greater convenience for consumers and more efficient last-mile delivery processes. The integration of technology, such as mobile applications and automated systems, can enhance the user experience and streamline operations.

Furthermore, by embracing out-of-home delivery solutions, GCC countries can address the challenges associated with traditional home delivery, such as missed deliveries, complex addresses, security concerns, as well as traffic congestion, and CO2 emission. Parcel machines and pickup points offer secure, 24/7 access, ensuring that customers can conveniently collect their parcels at their preferred time and location.

As the GCC region strives to bolster its e-commerce sector and develop sustainable logistics systems, out-of-home delivery solutions hold significant promise. Although the market is still in its early stages, with low density and utilization rates, the potential for growth is immense. By increasing investment, fostering innovation, and leveraging technology, GCC countries can establish robust out-of-home delivery networks that support the surging e-commerce industry while providing convenience and reliability to consumers. The future of e-commerce in the GCC is bright, and out-of-home delivery will play a pivotal role in shaping its success.

This article is based on Out Of Home Delivery in GCC 2022. The next edition of the report is planned for this year. If you want to know more and participate in the creation of the report, please contact me Greg Urban

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