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. Due to a large population in this region, growing smartphone penetration and 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 much thanks to the Amazon-Souq deal, referred to as the biggest 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 rate of smartphone penetration, mobile has a significant role in this e-commerce trend. Consumers are shifting to making purchases on their smartphones instead of on desktop and all of the biggest companies have developed their own apps to attract high-value customers. According to the 2016 Middle East report by McKinsey & Company, 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 major 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 of the e-commerce business are deliveries, infrastructures and availability of secured online payments. To enhance the customer experience and enable growth, we will likely see an emergence of logistics and Fintech technology companies in this region.
Retailers in the Middle East will accelerate efforts to compete in the digital space, while other international companies could 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 be capable of staying competitive and relevant. We will likely see a consolidation process and possibly more M&A activities.
Overall, the next few years will be very interesting with e-commerce continuing to evolve and expanding to mainstream and niche categories. More companies will recognize this potential and e-commerce will lead the innovation and digitization in the region.
Noa Drezner is a Business Development Manager @ DauUp-ClicksMob. Noa is helping e-commerce startups and large companies with their mobile user acquisition growth strategies in the region across Facebook, Google and Performance Platform.
If you’d like to hear more about DauUp-ClicksMob mobile user acquisition solutions and how Noa and her team can help you grow your app, contact Noa at firstname.lastname@example.org.