Region’s online retail on cusp of breakthrough
Growth, mobility, trust, diversification, customisation and engagement... or, in a nutshell, the direction e-commerce is taking in 2014. A fast-evolving landscape with huge potential, the region’s e-commerce market is developing into its maturity phase, driven by a young, connected, enthusiastic and tech-savvy population.
- Potential: If we only think of the size of the offline retail market in the region, estimated at $425 billion (Dh1.56 trillion), capturing only five per cent of this market represents a massive opportunity for the e-commerce industry.
- The rise of m-commerce: With one of the highest smartphone penetration rates in the world, this region is at the centre of the digital revolution. The new generation of Arab consumers are well-connected and want a convenient, easy, on-the-go shopping experience. The next 12 months will see continuous development of m-commerce in the region as mobile becomes an integral part of our everyday lives.
- Overcoming the trust issue: While online security remains one of the primary concerns for the majority of Middle Eastern consumers, we are seeing growing confidence and adoption of the credit card payment option. The presence of trusted international platforms like PayPal has helped to build confidence among customers as we slowly evolve from a cash-oriented society and adopt new electronic ways of payment methods.
- Business model diversification: Development of the e-commerce scene initially began in the hospitality and travel sectors, before expanding into other categories including consumer goods. While the travel sector still dominates the region’s online spending habits, we will be seeing a lot more diversification and expansion of other categories including fashion, food and drinks and consumer electronics.
- Greater choice: Online consumers in the Gulf are becoming more sophisticated with their online purchases; they do a lot of research and price comparison, which is why it is important for us to offer our customers the widest choice and best value. Local e-commerce businesses are quick to respond and we are seeing many of them expanding their product offerings to cater to a more affluent audience.
- The power of social media: Social media has become an integral part of e-commerce business as one of the direct means of interaction and engagement with our customers. With over 15 million Facebook users around the region, social media is the extension of the online retail experience and the ultimate sales channel. The sense of community that MarkaVIP has built, with over one million Facebook fans to date, is exceptionally valuable. An increasing number of brick-and-mortar businesses are realising this potential and using social media as one of the primary ways of engaging with their existing and potential customers.
- International players, regional footprint: The ease of delivering products from around the world through courier companies such as Aramex and DHL means that consumers from this region are able to browse and order directly from international websites. The huge potential of the region will attract, in the next 12 months, international players looking to establish regional offices as part of their expansion plans.
- Proliferation of B2B enablers: In 2014, we will be seeing accelerated growth of companies who will enable us, through innovative means, to work in more efficient ways, overcome challenges and create a more sophisticated user experience, including smoother payment options and less complicated logistics processes. There will also be more substantial growth in the number of A and B rounds of venture funding for e-commerce start-ups, which will further enable the growth of the market.
- Moving from offline to online: In the last few years, we’ve seen many traditional retailers adopting a digital retail strategy and expanding their business by opening online platforms. Today’s consumers want a multi-dimensional retail experience that allows them to get the touch and feel of a product and still be able to buy it online at the best value. The same trend created the need for e-commerce businesses to find innovative ways of engaging with customers offline, such as pop-up stores.
- Locally generated and targeted content: The staggering growth of internet users has stimulated strong demand for digital content creation. An increasing number of Arabic forums and interactive online platforms are being introduced as the new generation of Arab consumers embraces the power of the web.
(News courtesy : Financial Times