14 Oct 2013

Middle East Ecommerce: Opportunities and Challenges

As Google, PayPal and logistics firm Aramex announce an important ecommerce tie-up in the Middle East to empower small businesses to go online, we take a look at what it means for the region’s retail landscape.

To say that ecommerce in the Middle East and North Africa (MENA) is growing would be putting it lightly.

With 30 million people shopping online in the region today, this is a market with clear online potential. Yet it is still the case that ‘offline’ dominates the region’s retail landscape – around 90% of SMBs are not online.

Things are changing, though. Google, PayPal, ShopGo and Aramex recently announced the launch of a new initiative to empower retailers – particularly smaller ones – to head online in MENA for the first time.

The idea is that the platform, called EZStore, will act as a hub or one-stop-shop for businesses wanting to go digital, enabling them to enjoy a three-way funnel process: promoting their online shops with Google, managing payments with PayPal and shipping merchandise though Aramex.

The link-up is significant, because it is a concrete sign that major players are taking MENA seriously and doing more than just talk.

State of play

  • The Middle East is a relatively new market, but its potential is significant. Research from PayPal shows that:
  • There are 110 million internet users in the MENA region, of which 30 million are shopping online
  • Spending online in MENA will grow from $9 billion in 2012 to $15 billion by 2015,
  • Mobile is a growth area; of that $15 billion spent online in 2015, $3 billion will be paid for on mobile
  • About 10% of online purchases are made on a tablet or mobile, 90% on a computer
  • Online shoppers in the Middle East spend the most annually on Amazon.com of any international website

‘Dynamic market’

Speaking to Gulf News, Wassim Kabbara, head of retail at Google Gulf, said: “When you look at the fundamentals for ecommerce in the region, on one hand a very large and vibrant internet population and on the other hand a very large and dynamic retail market.”

The purpose behind EZStore is to help “transition from offline merchants to go online. It will be easier for merchants to come online at most affordable prices”, he added.

Challenges and trends

EZStore seeks to solve a particular ecommerce stumbling block in the Middle East – actually getting a website up and running. So with the right tools, templates, tips and tricks at hand, it should be a whole lot easier for new ventures in the region to set up shop.

But as ecommerce in MENA goes mainstream, more challenges for retailers will arise, especially for those coming in from other countries.

As the number of devices consumers use to shop with – traditional desktop, smartphone, tablet – shifts and changes, website accessibility and ease-of-use will become key.

Another is the rise of Arablish. A frenetic mix of Arabic and English, Arablish is increasingly being used in MENA, particularly by young, Western-educated Arabs. Such shifting language trends in the Middle East present a particular challenge – and opportunity – for retailers.

Companies know that when it comes to the customer, communication is key. As they look to reach out to their customer base through online content, they will need to develop effective localisation strategies to ensure they establish consumer relationships.

Other spheres where language will become an important part of the mix include customer service, particularly on social media, where consumers expect prompt, accurate dialogue with brands.

As a number of stumbling blocks to online expansion in MENA start to be tackled, the region can be regarded as fit for growth. The EZStore project is a good example – backed by well-known names, it should work to encourage thousands of start-ups and SMEs to make the leap online.

But as to where this fertile market goes next? That is the bigger question. We’d like to hear your thoughts on this.


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