SME Advisor presents the following outlook by Ronaldo Mouchawar the man at the helm of the region’s most successful e-commerce site Souq.com.

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With high GDP per capita and the highest smartphone penetration rate in the world, the Middle East represents one of the fastest growing e-commerce markets globally – with UAE and KSA taking the lead. 2015 saw e-commerce in the region touch a staggering US$39 billion and this is expected to surpass US$45 billion this year. 2017 can see the results reaching up to US$51 billion or even more. In the UAE and KSA alone, 6.8 million and 10 million online transactions were carried out last year respectively. These figures are a clear indication of the great opportunities that exist within the region’s thriving e-commerce industry. Major players such as Souq.com are fuelling this growth further; for instance Souq.com is providing consumers access to over 1.5 million products across categories such as consumer electronics, fashion, household goods, watches, perfumes and many more.

Moreover, high rates of smartphone penetration are driving m-commerce growth rapidly. There has been a significant rise in the level of smartphone penetration in the Middle East, currently at 96 per cent and valued at US$4.9 billion. UAE is ranked the highest in the region with a smartphone penetration rate of 78 per cent. This highlights a huge opportunity for e-commerce players – especially those that have mobile apps. In fact, more than 60 per cent of our sales are driven by mobile shopping today has also led to a demand in tailored payment solutions.

With the rise of technology and internet penetration, consumers are getting smarter and realising that e-commerce gives them convenience, lower prices and a greater variety.

Top trends reshaping Middle East’s e-commerce sector

  1. While e-commerce in the Middle East region is expanding and growing at a fast rate, there have been certain product categories which seem to be in a greater demand specific to the region. These include electronics, apparels, shoes, toys and games.
  2. While 60-80 per cent (percentage varies from market to market) of the online purchases in the Middle East are on Cash On Delivery (COD) basis, there has also been a development of facilitated electronic payments, resulting in increased confidence in e-commerce transactions. This change in consumer behaviour will see a growth in retaining existing satisfied consumers and recurrent transactions. Over the longer term, we believe the COD percentage will come down as the tech-savvy consumers in this region fast getting more comfortable with online payments. We are seeing a shift towards credit card usage.
  3. As consumers are becoming more sophisticated and demanding higher level of service logistics, next day delivery is growing to become bigger.
  4. M-commerce within the region is booming and by great numbers, which is leading to the development of better app-based offerings and providing easier access to consumers through mobile friendly websites.
  5. Social media is everywhere these days and so easily accessible on various devices right from a desktop device to a smartphone or tablet. With the large influence of these social media platforms, there has also been an emergence of new trends including social shopping. An increasing number of businesses are realising the influence these social platforms can have on consumer buying behaviours and are integrating them in their development plans.
  6. Brick and mortar shops are now embracing e-commerce and offering the same products and price points through digital platforms. With such intense competition, it becomes important to stand out from the clutter and offer a personalised and customised online shopping experience to the consumers. Many experts have termed 2016 as the ‘year of experience’ and this is something that every business needs to consider. This includes integrating elements such as live chat assistance on your platform and using customer preferences information to offer customised products specific to their needs and demands.

Shopping in the future: how it will be different by 2020, both online and at malls…

As the largest online retailer and marketplace platform, it is imperative for us to stay ahead of the curve and work in tandem with the trends influencing the online shopping world. We believe that our offering should be backed by scalable technology and intensive market intelligence. Based on our research, here are some key emerging shifts we’ve identified that will impact the e-commerce landscape in the next three to four years such as:

  • App-based shopping: We envisage most of the people to be shopping on apps and desktop share would reduce significantly. The technology backing the apps platform will see significant improvement and shopping experience would improve significantly.
  • Social shopping: A lot of product recommendations would be generated on the social media and they would be customised to suit the individual needs of the customer. For example, based on the number of likes for a particular dress, a customer could decide whether to buy a product or skip it. Therefore, social recommendations will increasingly influence shopping decisions.
  • Image search: Search would not be limited to text alone; you would be able to search the images you see and like on the internet. In fact, this is a space that Souq.com is personally looking to pioneer; we want to be the first portal to introduce this to the region.
  • Omni-channel: Omni-channel will be an important strategy for all the brands and retail stores going forward.
  • E-wallets: Finally, as a trend e-wallets will become a reality. All loyalty programmes would be linked to the wallets and so will bank accounts and credit cards.

At Souq.com, our team is completely dedicated to adopting emerging technology to meet the needs of these emerging trends. This is the only way we can realise our mission to further grow our platform to integrate millions of consumers, thousands of merchants and hundreds of services; and above all provide a strong technology platform for empowering the youth in the Arab World which opens up a new means of livelihood for them.

Your partners in growth

As we grow year-on-year and evolve over time, it is important that we take our partners with us. We enable SMEs and entrepreneurs in the region to start and grow their business online and provide a multitude of ways to earn money through our online e-commerce platform.

There are many businesses who are localising international ideas and dealing with the challenges of that, and there are many new ideas coming off the ground. Start-ups need solid technology platforms, technical assistance and market exposure to develop and grow their businesses. We believe that we can address these needs and bring value to regional entrepreneurs, by providing fast and easy access to their products with no upfront costs and minimal eligibility requirements. Additionally, this will also provide start-ups with increased visibility to potential investors, clients and partners to help accelerate business success and thereby foster innovation and encourage entrepreneurship in the Middle East.

We’re committed to the development of e-commerce in this region and offer various programmes which enable any individual or business to earn revenues from sales on Souq.com. Last year we also launched exciting new initiatives behind the scenes, allowing third party sellers to benefit. Souq.com became the first player in the MENA region to open up its API (application programme interface), which allows third party developers to embed shopping deals in their site or mobile application. This highlights our ongoing commitment to foster a dynamic e-commerce ecosystem. Anyone, from large businesses through to individuals, can participate in this affiliate scheme. We also announced our developer program that allows any business to ‘white label’ the Souq.com platform to launch its own e-commerce site. By taking advantage of the Souq.com API, business owners are able to set up their own website, where the end-to-end e-commerce process, including fulfilment, is powered entirely by Souq.com.

Rushika Bhatia Editor

Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.

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