Logistics for startups in UAE
Shopping is great fun, be it the online medium or in the real physical world. Retailers and businesses go a lot out of their way, strategize day and night to lure customers with amazing packing, placing products on the racks and shelves, product photography, etc. How many people know what happens behind the scene – how the product reaches the shelves and the racks? There are two parts to it – one, where the final product leaves the factory, goes to the warehouse, and then is shipped to the customer. The other, where raw materials and semi-finished products reach the factory, go through the final product’s manufacturing process to get made! That is where the logistics industry is at work. Here, we bring you insights into logistics for Startup companies in UAE.
It is not quite visible, but an SME business owner knows that his product and brand can only become a success when the entire logistics or the supply chain works seamlessly. UAE and the Middle East import more than 90% of all goods from other countries, including raw materials and finished products. It means that businesses, big or small, are dependent on robust logistics companies in UAE at the backend. A UAE startup company must address the logistics model with the future in mind. Business owners and entrepreneurs need to realize the importance of doing so – without a failsafe strong supply chain at the backend; they cannot run their business productively for long.
What is the importance of a robust logistics framework for startup companies in the UAE?
Logistics is the process of moving goods and products and storing them from the beginning of the product cycle to the consumption point. ‘Out of Stock,’ ‘Low inventory,’ ‘No inventory,’ ‘and product currently not available are some of the probable outcomes when the logistic chain is interrupted with problems. A disrupted logistics in UAE means inconsistency in facilitating the product reach its end-user. That, as per business terms, is the beginning of a disaster. Continuous failure to provide your customers with their chosen product may lead to your customers shifting to your business’s competition and final closing.
Since logistics is one of the key drivers of business stability and growth, startup companies in the UAE must finalize important logistics and freight transportation in UAE. What makes it important for an entrepreneur in the UAE is that businesses here mostly import raw materials and export finished products. Thus, it becomes vastly important to find a reliable and seasoned logistics company in the Middle-East.
Outsourcing logistics is one of the best ways to reduce costs and take advantage of the expertise of 3PL companies. Besides the intensive documentation and paperwork, customs clearance in the UAE can be complicated. By outsourcing, startup companies choose to stay focused on their primary work area while having specialists handle the entire supply chain.
Points to remember
- Logistics matter
It may not seem too much of an issue at the moment because your business is just starting, and you will feel that you are geared up relevantly for now. For example, most startup companies in the e-commerce segment start with the dropshipping model. The product inventory or stock is somewhere else – maybe, in the production country; thus, there is not much to ponder about freight forwarding from UAE. But not for too long. The moment the business starts to grow, you need proper warehousing and freight forwarding services in the UAE. If not now, in the next year, there will be a need to look for a reliable logistic company in the UAE. The planning should start now, especially ff yours is an e-commerce business. For any other business where many products come in and go out, it is equally true.
The faster you get the matter resolved, the better it will be in the future. The best is to align a trustworthy and powerful freight forwarder or cargo services with your business at the earliest.
- Freight transportation costs are important
Realizing the need to outsource logistics requirements to a third-party is fine, but what about costs? It is vital to remember that your end customer wants the products fast without paying much for the shipping cost. In most cases, you need to deal with competition that is charging nothing for shipping and deliveries. So, speed and costs are two important pillars of your logistics framework. Keep these two factors in front when picking your cargo services in UAE.
What is 3PL logistic, and what services are offered by them?
3PL or third-party logistics are companies that are making shipping and deliveries possible and seamless today. Most of these companies work with e-commerce merchants ensuring every aspect of the supply chain is handled by them until the product is delivered to the end-users doorstep. What are the services 3PL logistic companies offer?
- Transportation is one of the primary services. Top logistics companies in the UAE transport goods and products through air carriers, sea, and road.
- Warehousing services – this is a value add-on service that most leading 3PL logistic service providers offer. The goods are stored in the warehouse – raw materials, semi-finished products, finished products, etc.
- Freight transportation – in this case, the 3PL provider does not have their transportation means but connects with freight forwarders who have such vehicles, tools, and equipment to ship merchandise from one place to another. This type of service is mostly required while goods are being imported or exported.
- Reverse logistic services – in this kind of service, the 3PL company is responsible for disposing of the goods that remain unsold or unused. They clear the inventory or clean the warehouse, in other words.
- Delivery and courier services – some 3PL companies offer these services to offer their clients end-to-end services. The product is delivered right at the doorstep of the buyer by such companies.
What are the advantages Offered By 3PL Fulfillment?
There are distinct advantages of employing the services of a third-party logistics company in the UAE.
- Cost-saving is one of the primary benefits. 3PL companies have an extensive network and relationships within the sector. Small and medium scale businesses can’t match up with such logistic companies’ economies of scale. With better negotiation power, such logistic companies can offer competitive prices that help keep your overhead costs low.
- The 3PL company makes all kinds of investments in the latest technology and infrastructural requirements. SMEs and startup companies cannot possibly invest so much money in logistics at the beginning of their professional journey. Hence, best is to hire the services of a proven company.
- Knowledge of the logistic service provider – your logistic partner’s expertise can make your business more competitive. They have the complete know-how of the documentation and custom clearance processes. They are well-versed with international compliance and regulations. All of this knowledge helps your business products and offers products faster to the market, reducing the cycle time.
- Partners with you when you scale your business – the advantage of appointing the right logistic partner early on during startup is that the company supports you when deciding to scale up your business. So, when you plan to go in for expansion or diversification, you can seek the professional support of such logistic companies in the UAE with a faster turnaround time.
- Flexibility – when business is down, your stock is safe in the warehouse of the logistic company. When the demand soars again, you are back to normal business. The recent Covid-19 situation is a big learning exercise. Having your warehouse and freight transportation services in the UAE would have meant drastic losses during this time, with no international business happening and domestic demands being low. Whereas a 3PL service provider ensures maximum safety of your stocks in their warehouses, thereby saving your small or startup company from making redundant investments or bearing losses in the face of unutilized resources.
Logistics and supply chain are critical functions of your SME or startup business. With an outsourced logistic company in the UAE, you can focus on your core competencies. The more experienced and knowledgeable the partner is, the better it is for your business as you stay away from this non-core functionality cost-effectively.
Choosing the right service provider is critical for your business. They must be thorough with the customs clearance processes, documentation, and compliances. Do not fall into the trap of ‘buy cheap’ because it will surely lead to ‘buy twice.’ Do not cut corners in choosing a logistic partner. Ensure that all terms and conditions are discussed with precision and clarity at the beginning itself.