Dubai: Free delivery on online shopping orders or food and grocery deliveries ends as UAE suppliers adjust to rising fuel and operating costs. And they’re hoping consumers here can get away with not getting free shipping — or “pay” extra for it.

One of the biggest names in the grocery space has sent notes to its shoppers saying there will be immediate changes to “minimum order” requirements if they still want access to zero shipping. For now, that’s the strategy most suppliers are adopting to offset the steady fuel gains in recent weeks – raise the minimum order. And if consumers still prefer free shipping, they may have to wait longer for delivery, so the retailer can cancel orders.

“The message is clear – if you can afford to offer free shipping, then do it,” said Richard Nicoll, director of strategy and capabilities at consultancy Liquid. “If you can’t, you need to do more of what is necessary to win with the other customer experience fundamentals, especially quality and convenience.”

E-commerce and food delivery sources say it would be difficult to completely remove “zero shipping costs” for consumers in the United Arab Emirates. Plus, there would always be a vendor that would continue to offer this. In the e-commerce space, small and medium shopping platforms cannot afford to lose buyers, especially if their order is entirely determined by whether or not they have to pay shipping costs.

“A survey of Amazon’s shopping preferences in the Middle East found that consumers in the UAE shop online for two main reasons: fast and ‘free’ delivery,” said Soham Chokshi, CEO and co-founder of Shipsy. “Brands are still trying to find ways to continue offering free shipping despite the added cost due to inflation and rising fuel prices.

“Whether it’s online shopping or delivery companies, almost everyone is finding ways to absorb rising logistics costs. Amazon rolled out an additional 5% fuel and inflation surcharge to third-party sellers who use its fulfillment services towards the end of April. Global transportation giants like UPS and FedEx have increased their fuel surcharge for all services to prepare for rising fuel prices. »

What should this “minimum order” be?

This would vary depending on the seller, and whether it is food or fashion and accessories ordered. The very nature of the F&B business suggests that delivery portals will adjust order sizes so that they don’t lose that deal.

According to Aarohi Surya, co-founder of Yalla Veggie, “One of the key aspects to developing the best delivery strategy for e-commerce businesses in 2022 is getting the delivery price right. Low enough for customers to be prepared to pay and the price must be high enough for businesses to be profitable.

This perfect balance could be difficult to achieve. More so in e-commerce. “Research in the region shows that high shipping costs are a leading cause of shopping cart abandonment,” Surya said. “With our calculation, we found that if the delivery cost increased by even Dh1, a customer’s net order value decreased by 75%, resulting in an overall unsustainable pattern.”

When it comes to online shopping, the average basket size in the UAE is around $150 and online retailers claim that’s a reasonable amount for a minimum order and free shipping.

This is the fine line that businesses must cross.

Change consumer preferences

Any supplier forced to remove free shipping from their options will find that consumer preferences do not change overnight. And right now, “A YouGov survey revealed UAE’s online shopping preferences like same-day delivery, free delivery and ease of returns and refunds,” Nicoll said. “The question is whether this is sustainable for a long-term business. This is difficult for e-commerce, especially with direct-to-consumer models, as well as external factors, such as the significant increase in fuel prices, which will undoubtedly impact operating margins.

For now, the growth of online shopping and F&B/grocery orders has reached consistently high numbers, even taking into account the decline from their 2020 highs. It is a fact that more and more d ubbers in the UAE are turning to the internet for their day-to-day needs, which explains Q-commerce’s rapid growth. (Q-commerce is for orders delivered in less than an hour, or 30 minutes, which is considered the sweet spot.)

So, for both consumers and suppliers, the best interim solution would be to pay more and get free shipping on delivery.