ecommerce-in-the-middle-east

E-commerce in the Middle East: Then, Now, and the Future.

The middle-east includes countries of Egypt, Turkey, Iran, Iraq, Syria, Yemen, and the Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). Despite being among the most advanced economies, the middle-east is still far behind when it comes to the online business realm.

Then: Conventions and Challenges

In 2016, when e-commerce was already at full force in other countries like the US, Europe, and India, a Garner study reported that over 85% of businesses in the middle east did not have any online presence. In spite of having one of the highest digital literacy rates and the best internet penetration in the world, only 2% of their retail was online. Also, 90% of the online transactions that were made were due to foreign businesses.

One of the major challenges impeding the growth of e-commerce in the middle east is the lack of area codes. This is something so trivial yet vital. The absence of area codes can affect last-mile deliveries and slow down entire supply chains.

Another pain point is the conventional use of ‘cash on delivery.’ Digital payments have yet to pick up pace in the middle east. Except for UAE, the rest of the countries in the middle east still opt for cash on delivery as their primary payment choice

Among the many factors in place, trust is the major player influencing such behavior of the customers. PwC studies show that 62% of the customers prefer offline payments because they are concerned about their information being leaked online. Thus, there is a need for a trustworthy, mobile-friendly, online payment platform in the region.

The complexity of language and dialects also makes it difficult for businesses to move online. Due to all such factors, the online business landscape and e-commerce activities have taken a back seat in the middle east.

Now: Trends and Opportunities

However, with the onset of the pandemic, businesses and customers were forced to get used to the online way of doing things. According to a report released by GoGulf, a company based in UAE, the middle east is seeing unprecedented growth in the e-commerce sector. As per the report, the e-commerce revenue quadrupled in 2020. It generated nearly USD 20 billion in GCC countries alone.

Experts say that this is more than a global pandemic trend, rather this is a transformative shift in the local systems. So, with this, it is safe to say that the GCC countries and the middle east have successfully entered the online paradigm.

Even before the advent of Covid-19, few governments and businesses in the region realized the importance of online finance. So, to support the cause, Saudi Arabia passed an e-commerce law with an aim to achieve a 70% e-payment target by 2030. Similarly, other companies started opening online portals and expanded their trading online. As more and more companies followed suit, and governments came up with programs to enhance the digital infrastructure, digital businesses slowly became the norm; today’s e-commerce growth in the middle east is nothing short of impressive and is still expanding.

So, what are the drivers that motivate people to buy online?

The middle east is famous for its mall culture, so it is obvious that most people are accustomed to the touch and feel of a product than swiping and booking online. However, it is also true that shopping behavior can change based on markets and demographics.

For instance, a PwC survey stated that younger people are more inclined to shopping online. Similarly, women showed more interest in shopping online and a significant number of them expressed it as their preferred choice.

36% of the people aged 18-24 were observed to be shopping online at least once a month and 1/3rd of the women surveyed admitted to buying something online every week. From this, it is evident that demographics do play a role in shopping trends.

The survey also shows that convenience, price of goods, and product selection are other major metrics that influence shopping trends. Of these, the price of goods was stated as their biggest motivational factor by 40% of customers, and the least motivating factor was convenience(17%). This is due to high delivery times which aren’t very ‘convenient’ for an online customer.

According to the report, the major categories of products brought through e-commerce are video games & movies, health & beauty products, electronics & computer goods, jewelry, clothing & footwear, and furniture & home appliances (in that order from most to least). Surprisingly, grocery shopping isn’t as famous in the region, only 27% of people were recorded to be buying groceries online.

So, businesses in the regions must encash upon these opportunities and plan their online strategies accordingly.

Future: How to prepare?

The future looks bright for e-commerce in the middle east. However, fortune only serves the wise. Setting up an online platform for your business and marketing your products for a cross-channel presence is where you must start. A brand image is the most attractive way to woo customers as per many market studies in the middle east. So, work on building your brand and expand your presence into major online marketplaces such as Souq, Noon, Namshi, eBay, Amazon, etc.

Your online website is akin to your physical brick-and-motor shop, only this is online. So, it is necessary that you take more care and caution towards it than your physical store. Due to constraints like time, interest, and other factors that distinguish an online store from a physical one, you do not have much time with the customers to impress them and make them interested in wanting to spend their money.

So, your website must be fast, responsive, and tailored to satisfy the needs of every customer; because, no matter how good your products and services are, no one will stay if the site takes too long to load. Also, every customer wants to be treated like a VIP, so, it’s your job to please everyone. To be able to achieve that, invest in tech like big data. It will be worth whatever you spend.

Only when customers feel valued, will they come back to you. So, customer satisfaction is the priority. Also, it is important that you optimize your e-commerce platform so that it doesn’t have heavy downtimes. Your website is the face of your brand online, and you don’t want to seem unreliable.

In the middle east, trust is a major factor on which online businesses hinge. Consequently, investing in the security and data privacy of your platform is a must.

In this way, you can build a compelling presence online and provide customers with just what they want. So, e-commerce is what you should invest in if you haven’t already and dig up the potential lying dormant in your business. 

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