Need for e-commerce environment to improve

For stores here to feel the pressure from online sales, the e-commerce environment will have to improve, but Jumbo CEO Peter McElwaine doesn't see that happening for the next 2 to 3 years. He said that Jumbo doesn't have any plans to enter the online market for at least the next 12 months.

Aubrey Ghose, the CEO of AIS Brand Lab a, brand-design firm that specialises in brand-building, thinks that now is the time for companies in the region to be thinking about developing integrated strategies. He says so far he just doesn't see it happening in the region.

"Everyone thought [e-commerce] would be great and take off but it hasn't until recently," he said. "So everyone here is of the mindset that online isn't a big thing to have."

But Ghosh is predicting that online sales in 2009 will increase 50 per cent globally, due mainly to better internet penetration, faster computers and improving logistics. E-commerce in the US saw sales of $130.1 billion (Dh477 billion) in 2008, according to research firm comScore, but that represented a substantially lower growth rate, only six per cent, than in previous years.

There are a number of reasons that retailers here haven't gone online, but one of the biggest misconceptions is that having a website is enough.

"The big thing the region here doesn't get is that just having something on the internet doesn't mean they have an integrated strategy," he said. "Stores have to drive online sales and your online experience should reflect your in-store experience."

Ghose points to Apple's retail stores as prime examples of an integrated strategy. He says the Apple store is not about selling products but about being an experience centre.

"Anyone who is not trying to find an integrated solution, especially in a down cycle, is going to go out of business in a year."

Comprehensive industry figures about the size of e-commerce in the Middle East are hard to come by, but Hassan Mikail, a regional marketing manager for Aramex's Shop-n-Ship service, said his company saw almost double the growth in the number of parcels originating from e-commerce sites last year. Aramex launched the service 5 years ago, which allows customers to have items purchased online delivered directly to them, and has seen it grow in parallel with the rise of internet usage in the region, he said. Last year was the first time the service saw double-digit growth.

"The e-commerce landscape is finally waking up," he added.