Middle East eCommerce – Shopping is Big Here

I just got back from a week-long visit to the Middle East spending time with retailers in UAE and Kuwait.  It was the height of summer, with temperatures around 44C/111F and the holy month of Ramadan – a uniquely Middle Eastern experience.

Also uniquely Middle Eastern was the state of retail.  Wherever I turned, concierges, friends and well-wishers suggested I visit their country’s malls.  From the Dubai Mall, to the Emirates Mall, to the Avenues Mall in Kuwait.  Shopping is big here.  In 1996 Dubai established the 1-month “Shopping Festival”.  Even Ramadan has been intertwined with a shopping experience, with malls hanging greetings of “Ramadan Kareem” throughout the halls and certain malls running Ramadan Campaigns (‘ A Ramadan to Remember’ http://www.tradearabia.com/news/RET_239438.html)

I had to see what they had in store.  Each mall is an architectural marvel.  The Burj Al Khalifa, at 829.8 m (2,722 ft) is the tallest building in the world and an anchor of the Dubai Mall.  The mall of the Emirates includes a ski slope, complete with real snow.  Each mall is marbled and cool, comparable to malls in the US (Natick Mall, Mall of America, Destiny USA) or Europe (Galleries Lafayette in Paris, Westfield mall in London, Colombo Centro Comercial in Lisbon) but for an over-the-top attraction, some Islamic-influenced architectural details and an advertising break for Ramadan prayers.  A great majority of the retailers are familiar- from the highest end Tiffany’s, Chopard, Rolex, Stella McCartney to the practical Nike, Gap, Starbucks. 

Each one of the retailers I visited during the business trip posed two questions:

  • There is so much traffic in the mall – why should I go online?
  • Who are your examples in the Middle East?

The questions were startling in their own rights.  The first question about going online was a surprising one coming from retailers who are actively engaged in an online initiative.  Data supports the fact that the ecommerce industry in the Middle East is growing:

“ The estimated number of internet users in the Middle East is 90 Million and only 15% of Middle East businesses have an online presence.  B2C eCommerce sales in MENA will reach an estimated $15 billion in 2015 (up from $9 billion in 2012) . The value of mCommerce in MENA could reach US $4.9 billion by 2015 .”http://www.go-gulf.com/blog/ecommerce-middle-east/

Over 10% of online users in the UAE, Saudi & Qatar purchase online at least 3 times a month.

As with online traffic – conversion is the true measure of sales.  Although the malls attract traffic thanks to their sights and cool oasis, conversion seems low with few shops full and hands empty.  The Malls are such a feature of socializing and entertaining that shopping in these locales is a secondary priority to relaxing and connecting.

Visa has called the MENA region the “fastest region in the world for eCommerce,” citing “45% year-on-year increase to 15 billion USD in 2012” http://www.arabianbusiness.com/mideast-e-commerce-growth-fastest-in-world-says-visa-502465.html

The numbers in the two articles don’t quite add up – and is part of the problem another one of our observations?  Consumers in the MENA region certainly shop online today, but may be forced to shop outside of their region based on the availability of retailers operating online in MENA. 

The second question was surprising because the retailers with whom we were speaking have the first mover advantage in their markets.  Relatively few retailers in MENA operate online.  Though Dubai and other GCC countries may be at the forefront of a brick and mortar shopping experience, they lag behind in terms of mobile and online offerings.

Prospects and customers in other emerging regions, such as Russia and China ask for local partners but look for Best in Class examples in Europe and North America to set their charter.  These regions resemble the Middle East in many patterns and trends and are determined to seize the opportunity, realizing that as soon as the market matures, it might be too late to defend against the behemoths such as Amazon and eBay.  I would argue that the Middle East is better poised than Russia and China to seize opportunity thanks to stable transportation and infrastructure, large disposable income in its potential customer base, and historical tradition of trade.

Currently, the market lags behind.  The few retailers transacting online today fail to take advantage of the online and mobile commerce features that enable personalization and merchandizing to optimize the experience and prefer to take a more functional approach.   Are they leaving the door open to external retailers and the Amazon and eBays of the world to dominate their local markets?

There is such a strong opportunity in the Middle East for Mobile and Online Commerce.  The region also has a historical legacy as a re-export and trade hub.  Now is the time to take that experience online. 


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