The e-commerce space is rapidly evolving worldwide, with more shopping happening on digital platforms and retailers crossing from offline to online channels. In the recent year, this trend is picking up in the Middle East as well.
Because of a large population in this region, growing smartphone penetration and the change of buying habits, the Middle East e-commerce market is set to show exceptional growth and become one of the world’s fastest growing online markets.
E-commerce in this region is gaining traction thanks to the Amazon-Souq deal, referred to as the most prominent technology M&A transaction in the Arab world in recent years. Last month’s 650-million-dollar acquisition provides a glance to the BIG potential of the region.
With a vibrant technology scene and improving infrastructures, UAE’s ecosystem has shaped up as a business center for the area, attracting investors and entrepreneurs from around the world. Regarded as the tech and financial hub of the region, UAE is taking center stage for e-commerce growth and start-up boom that drives the economy and the digitization process.
Thanks to the high smartphone penetration rate, mobile has a significant role in this e-commerce trend. Consumers are shifting to making purchases via their smartphones instead of desktop computers, and all the biggest companies have developed their own apps to attract high-value customers. , smartphone adoption in UAE, Qatar, and Bahrain is even higher than in the United States (100% vs. 80%). Other countries in the region still have a relatively low smartphone penetration rate and present a significant growth opportunity within the digital and mobile commerce space.
So, What Does the Future Hold?
According to some studies, the GCC (Bahrain, Oman, Kuwait, Qatar, UAE, and Saudi Arabia) e-commerce market could almost quadruple and reach $20 billion by 2020.
The biggest challenges for the e-commerce business are deliveries, infrastructures and the availability of secured online payments. We will likely see the emergence of logistics and Fintech technology companies in this region, which will contribute to the enhancement of customer experience and enable growth.
Retailers in the Middle East will accelerate efforts to compete in the digital space, while other international companies will seek to make a footprint in the area as their core markets mature.
The region will become more crowded, especially with the expected arrival of yet another new e-commerce venture, Noon.com. Small companies will have to step up their game to stay competitive and relevant. We will likely see a consolidation process and possibly more M&A activities.
Overall, the next few years will be exciting with e-commerce continuing to evolve and expand to mainstream and niche categories. More companies will recognize this potential and e-commerce will lead the innovation and digitization in the region.
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