E-commerce is witnessing a major growth spurt in the MENA region as consumers increasingly shift from the showroom to the webroom.
The revenue of e-commerce in the Middle East was estimated at $39 billion in 2015 and is expected to surpass $45 billion by the end of this year. Payfort’s State of Payments Report 2015, an annual report on the world of payments, e-commerce and innovation in the Arab World, even predicted that by 2020 the fast-growing sector will be “nipping on the heels of airlines” to become the biggest.
According to 'The PayPal Insights: E-commerce in the Middle East 2013' report conducted in conjunction with Ipsos, such rapid growth is due to two main factors: the massive jump in the online commerce population and the flood of local retailers coming online to fill the needs of these newly found customers.
And with Think with Google citing mobile among the top 3 2016 priorities for MENA marketing leaders, the evolution of webrooming is set to entirely transform the way consumers interact with brands.
For instance, British multinational banking company Standard Chartered has recently made a $50 million investment in Souq.com, the region’s leading online retailer. “We did this, because we felt comfortable that our region is in the early stages of real disruptive change when it comes to consumer behaviour, retail shopping and mobile technology,” the company’s website read.
Going back to the Payfort report, Facebook remains the number one channel for e-commerce platforms (41%), followed by Instagram (21%), Twitter (13%) and Pinterest (9%). Facebook rightfully tops the list as 65 percent of the total number of consumers who have bought something online are actively present on the social network, but the report expects that Instagram “may well take pole position” in 2016.
However, SEO is still of equal importance to social media in terms of boosting e-commerce sales with 16% percent each, followed closely by email marketing (13%) and referrals (12%) among other marketing channels.
Back in 2013, the PayPal insights report cited travel, consumer electronics, computers and jewelry/watches as the top online spending categories respectively. Airline tickets and hotel reservations/tours still occupy the first spot today, while event tickets have quickly overtaken electronics as the second top product MENA consumers buy online.
But even when the Middle East seems to have entered a new era of online commerce with increased smartphone penetration and enhanced infrastructure, e-commerce companies still face a number of challenges including cash on delivery (COD) which costs can prove damaging to small companies.
This being said, there is no doubt that the online commerce market is thriving on a multitude of fronts in the region, notably in Gulf countries like Kuwait, KSA and UAE along with Egypt and Lebanon, a move that is almost radically shifting the focus of MENA marketers towards prioritising their mobile customers in order to acquire new buyers and drive concrete results.