How Did The Middle East & North Africa Transform Into The Best Marketplace?

The retail industry in the Middle East & North Africa (MENA) is on the edge of a decisive change. Unlike other markets, MENA has not followed the traditional path to adopt ecommerce. Businesses that entered the digital selling were behind the time but geared up dynamically after 2010 and grew up 30% by 2017, known as the ‘digital media phase’.

In 2017, Amazon’s acquisition of Souq and the launch of noon changed the scenario of ecommerce in the Middle East countries. This beginning marked itself as an ‘ecommerce phase’, which is popularly known as the entry of MENA into the third phase of digital adoption. This year, with an annual growth rate of 25%, this market reached $8.3 billion that ensured a slight growth ahead of the global average. This data reveals a significant opportunity for the ecommerce market to grow over the next few years.

Over the last decade, the online shopping trend in Middle East Market has rapidly evolved and grown by 1500%. Gulf States (Iran, Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, and Oman) are estimated to quadruple from the $5 billion in 2015 that expanded to $20 billion till 2020 and will reach $48.8 billion in 2021. This evaluation reveals the potential of the e-commerce market in Middle East countries.

MENA consumers are the most active & digitally-savvy in the world discover, research and purchase whether they shop online or in-store. Their online activities influenced them to make the physical and virtual purchase. It ensures the highest level of internet, smartphone and social media penetration among the consumers.

Factors Driving Ecommerce Growth in The Middle East & North Africa

Fragmented E-Commerce Marketplace – Souq was the first to join the MENA ecommerce market and became the market leader. Later a year, a new e-commerce venture ‘Noon’ by the Public Investment Fund of Saudi Arabia brought a new digital movement. These big marketplaces played a significant role to enhance consumer’s experience with a wide range of product categories. These top two e-commerce players captured market share between 25% and 40%, a contrasting figure to other e-commerce markets where the top two players usually share more than 50% market.

Different Go-to-Market Strategies – By the beginning of 2017, pure players of the MENA market covered more than 90% of the market share because of their first-mover activity.  The absences of online retail infrastructure offer an opportunity to grab the lion’s share of the market. Big brands like Alshaya, Chalhoub Group & Landmark Group came forward to establish their online presence with third-party e-commerce pure players; whereas Al Tayer, Al-Futtaim and Majid Al Futtaim took the step to launch them as an e-commerce channel. This transformation to focus on e-commerce channel within retail groups will be an evolution for the Omnichannel business model.

Diverse Level of Retail Categories – In MENA, retail categories are not on the same level. Electronics, beauty and personal care have been the most developed categories in the ecommerce markets, while fashion and grocery are still lagging.  Electronics has emerged as the leading e-commerce category in the MENA with $2.9 billion in the GCC and Egypt, which is growing approximately 23% yearly in the past few years. With an estimated $200 million market, the luxury ecommerce category has been identified as the most significant category to develop speedily than high street fashion and ensured enormous growth potential in the Middle East countries.

Does the Future of MENA Look Promising?

In spite of being late to take off, the MENA ecommerce market has achieved momentum growth over the past few years. Still, it is at the launch of the cycle of e-commerce adoption. New players in the market, broader product selection and evolution of business models will play a major role to achieve this growth. Ecommerce experts forecast that the MENA market is at $8.3 billion that can grow 3.5 times by 2022. It has the potential to uncover a total market size of $28.5 billion with a penetration rate of 7% of total retail sales.  It is an opportunity for consumers, businesses, investors and the ecosystem, but it depends on how fast they come together.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on whatsapp
WhatsApp

Contact Now