July 17, 2019 - Dubai, UAE
The global e-commerce sector has seen several changes in the past five years, especially in the MENA region. According to research, it is estimated that the Middle East e-commerce market could experience an exponential growth of US$69 billion by the year 2020. Though that sounds impressive, it is to be noted that only 15% of regular businesses in the Gulf have an online presence while the majority of online shopping is done from foreign brands. Despite the disheartening fact, there is no doubt that the e-commerce in the MENA (the Middle East and North African) region does have potential to grow. Let us explore the reasons for its expansion, the major challenges, the key competitors and the general consumer behaviour in the Middle East region?
Why does the e-commerce sector have potential in the MENA region?
One of the major reasons for the e-commerce sector's rise in the Gulf is due to its extravagant shopping potential. Due to its oil production and export business, the region has a high capita per income in general. Contrary to popular belief, the internet influence is actually quite high in the Middle Eastern countries. As with the other parts of the world, smartphone penetration and cellular connectivity have seen quite a steady rise in these regions as well. Not just that, the UAE government is active in enabling tech companies to operate overseas. These countries are widely adapting to e-governance as well, which makes it evident that both the government and citizens are comfortable with the online sector. Though Dubai leads the initiative as of now, similar projects are under construction in its neighbouring countries as well.
What are the major challenges to the growth of the e-commerce industry in the Middle East?
Though the Middle Eastern region is working hard to realise the true potential of the e-commerce industry, they're not quite there yet. So, what are the issues that need to be addressed in order to make the e-commerce sector a success in the MENA region?
• The absence of pin codes in the Middle Eastern countries make it difficult for prompt last-mile deliveries. As of now, logistics and e-commerce organisations are working together on this to reduce costs and money.
• Though common in other parts of the world, digital payments remain an unexplored area in the MENA region. Apart from the UAE, the other countries rely on cash-on-delivery payments (COD) for their purchases.
• As of now, Saudi Arabia and the UAE comprise the key market in the e-commerce sector. However, the lack of population contributes to the scarcity of e-commerce industries in the Middle East. For example, countries such as Oman, Kuwait and Bahrain have a strong online presence but fall flat due to their smaller population. Though hasn't tapped the e-commerce industry to its full potential, it is home to the highest internet-using population in the Arab region. The country's Ministry of Communications and Information Technology (MCIT) actively participates in the expansion of e-commerce, which could be good news for the competitors.
What is the general consumer behaviour in the Middle East?
Despite the statistics, you'll still find several Middle Eastern businesses with their online stores. The biggest name on the list is Souq.com, closely rivalled by Noon.com, Namshi, eBay, Mumzworld and AliExpress. You can use the Noon coupon codes and Mumzworld coupon codes in order to avail attractive discounts on your purchases.
According to research, it was discovered that the younger generation preferred to buy products online as compared to their older counterparts. Moreover, women make up the majority of online buyers, with some purchasing something every week. The lower prices were one of the most common reasons given by the buyers, after which comes convenience. More than half of the Middle Eastern buyers use smartphones, while many of them would buy products based on social media ratings. Though most pay using the COD system, there are some people who use credit cards. Many were apprehensive of having their confidential information leaked out, while many more would buy from the brands they knew and trusted. Some of the buyers would engage in repeat purchases, thanks to the offers that would be offered on social media.
Using these statistics, it can be assumed that a mobile-friendly and well-secured e-commerce platform will attract online buyers. Moreover, they must use social media and other engagement campaigns for a strong online presence.
What's in it for the future?
Coming to the future, the Middle Eastern markets would be using hi-tech trends such as artificial intelligence, big data and mobile payment to attract customers. Retailers need to focus on excellent customer experience across multiple channels to keep up with the tech-savvy younger generation. Some of the common solutions include –
• Promise a smooth user experience with a responsive brand website and mobile application. Make sure to have several payments and checkout options for the customer's convenience.
• Incorporate multi-country, multi-language, go-to-market time and currency support systems to your website and application.
• Reach out to your customers by using search engine optimisation, digital and social media marketing and conversion rate optimisation.
• Have a simple, neat but sophisticated user interface in order to impress your potential buyers.
• Ensure that your platform can handle high amounts of customer traffic and order volume. Moreover, maintaining the security and confidentiality of customer data and payment information should be on top of your priority list.
Therefore, the e-commerce industry in the Middle Eastern has great potential to make history. With the right use of social media and product advertisement, the Saudi & UAE online shopping industry is certain to create a lasting impact on its audience.