“The Middle East e-commerce industry is heading for a critical moment as online trading activity finally begins to accelerate.” said Sameer Bagul, general manager of EVP.” the e-commerce market in the Middle East has opened a new era.”
In 2016, only 7 countries in the Middle East created $35 billion in online earnings, according to the Payfort 2017 report, and the UAE and Saudi Arabia contributed $20 Billion.
According to statistics, these figures are still less than 2% of the total retail market. so, the opportunity for developing e-commerce in the Middle East is Huge.
The current E-commerce market in the UAE is $27 billion trillion and is expected to reach $69 billion by 2020.
Dubai Chamber of Commerce estimates that in the next few years, the Dubai online retail industry will reach Two-digit Growth. From this point of view, the retail industry currently contributes nearly 11% of GDP in the middle East.
The Saudi Government’s Vision 2030 and the digital Oman strategy all want to lead the digital transformation, while the Dubai business plan is one of the latest major initiatives to promote E-commerce development in the Region.
The Uae’s “free trade area” aims to attract foreign direct investment and foster entrepreneurship among young people in the uae, providing State-of-the-art warehouses that help companies improve logistics efficiency and reduce COSTS.
These policies provide excellent development opportunities for e-commerce in the Middle East, which will greatly promote economic growth in the Middle East and transform to the digital economy.
What are the characteristics of the current e-commerce market in the Middle East?
1.Price is the most important
What is the most important e-commerce market? –price
Pricing is critical to any growth in e-commerce, and companies that don’t have a well-thought-out pricing strategy are often unable to survive in this highly competitive industry.
Although consumers do not make purchase decisions based solely on price, the pricing factor is still ranked First.
As commodity prices in retail stores in the Middle East continue to rise, consumers are turning their sights on e-commerce and comparing the various options that are common on the Web.
Most e-commerce companies use their scale to negotiate directly with manufacturers, close distribution gaps and offer lower prices to consumers.
For any e-commerce company, the introduction of search traffic is key.
When consumers are likely to buy some products, they tend to view alternative options online before making a “buy” decision.
This is the hardest part of the E-commerce platform because they have to constantly build and maintain tens of thousands of inventory units (skus) across multiple product categories to provide consumers with endless choices to keep search traffic flowing.
The popular online payment model includes digital wallets including Apple Pay and Samsung Pay, as well as digital card services such as Visa checkout and mastercard, which helped grow the Middle East Market.
While online payments and mobile payments also help the middle East’s e-commerce platform to increase user stickiness by providing users with convenient payment METHODS.
Today, the digital infrastructure in the Middle East is shaping at an alarming rate, which has contributed to the development of online payment models for different markets in the Region.
The united Arab emirates leads the pack with a staggering 97 percent growth, while Saudi Arabia has 45 percent and strong follow-on growth.
In the middle east, credit cards account for more than 30% of e-commerce companies ‘ payment patterns, while online travel companies pay nearly 80% of their payments, and there is much room for development in the online payment Area.
Notably, cash delivery remains the preferred method of payment for more than half of online buyers in the Middle East due to ease of use, while about 70 percent of online shoppers in Egypt prefer to pay in cash.
Logistics is another important area of e-commerce in the middle East.
At present, the “same-day delivery” option has been listed in several e-commerce companies in the local logistics distribution strategy. Traditional retail chains are also mimicking this model, selling goods through their own online channels.
In the early days, Souq and Namshi had created their own logistics teams and invested a lot of money in Infrastructure.
A relatively new platform like noon is the use of third-party logistics providers such as FETCHR and Aramex.
These logistics providers cater to the Region’s last-mile demand, enabling the E-commerce platform to focus on inventory, product and Marketing.
Most Middle Eastern customers will abandon their shopping cart when they see their “delivery fee”, and the cost of delivery erodes the Company’s share of Profits.
It will take some time to find the right balance between the advantages of same-day delivery and charging customers higher delivery fees.