SAWT BEIRUT INTERNATIONAL

| 2 February 2023, Thursday |

Delivery sector flourishes despite ongoing crises

Rania Ghanem
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At a time when all economic sectors in Lebanon are struggling for survival, the delivery sector is flourishing, as coronavirus pandemic, along with the fuel crisis lately have showed the urgent need for delivery companies, and gave the sector a strong push forward.

Demand

Since early 2020, the delivery market has witnessed an unprecedented growth, due to the tremendous demand coming from individuals, e-commerce platform, retail stores, restaurants, supermarkets, and private sales platforms through social media. This boom contributed to the birth of new delivery companies, and boosted activity of existing delivery companies. In this context, Co-Founder and CEO of Toters Tamim Khalfa, told Sawt Beirut International (SBI) that demand still exists from restaurants and stores despite the closure of many of it due to the crisis, but this varies according to the type of product, as devaluation and the low purchasing power has limited demand for basic needs.

The lockdowns along with social distancing measures imposed by the Covid-19 have contributed to a high demand for delivery services. Demand has also increased lately due to fuel outages, as many citizens resorted to delivery companies to get their purchases instead of using their cars and waiting in long queues at gas stations. The hike in fuel prices has been a main reason to rely on delivery companies as a way to reduce expenses.

Higher operational costs

On the other hand, the cost of delivery services has increased due to the hike in fuel prices and operating costs, according to Khalfa. The service that was provided for 3,000 LBP has increased to 12,000 LBP. The price of the service may sometimes exceed the price of the product to be delivered. Yusr Sabra, Founder and CEO of Wakilni, which provides delivery services for commercial stuff such as clothes, furniture, cosmetics, and others, told SBI that the prices of services have increased by 500 percent since lifting subsidies on oil derivatives.

New Approach

The high operational costs of companies and the unprecedented drop in the purchasing power of individuals led to applying a different mechanism for pricing. Sabra said companies are striving to provide competitive prices that would meet the customer’s purchasing power and keep us able to preserve the employees’ rights. “We used to adjust the price schedule every two months, but currently we are adjusting it twice a month due to increase in gasoline prices,” said Sabra.

She added: “The dollar exchange rate on the black market affects the operational costs as well, as the company pays for the servers running its network abroad in dollars.” Sabra said that the price hike has affected demand for some products and routing efficiency. “We used to deliver orders directly to any area across Lebanon, but now we implement more efficient routes, as we allocate specific days per week to deliver products to some areas,” she said.

Delivery companies are striving to organize their logistical operations by studying the exact path of the drivers who deliver the orders. Khalfa said: “We seek for one driver to deliver a number of orders at the same time, to reduce the cost on customers.” Distance has also become a key factor in the pricing of the delivery service, according to Khalfa.

Innovation

Sabra considered that this crisis will pave the way for innovation in the sector in line with the market need, and it may be a motive to shift towards using electric bicycles, for example. In this context, Toters is also developing a service that allows the customer to fill a prepaid card and purchase the products he wants, and provides a number of attractive offers to new customers.

    Source:
  • Sawt Beirut International