Online Commerce in The Middle East – Shopping Online – The Tipping Point Is Now?

Ajlan & Bros, a large Saudi Arabian distribution company specializing in the design, manufacture and supply of clothing across the Middle East has just announced a significant investment in online commerce.  Does this present a tipping point in the development of online commerce in the Kingdom of Saudi Arabia?  Three years ago, there was very little attention outside the core early adopters.  As with many markets breaking into online commerce, those early adopters were electronics retailers catering to very tech-savvy consumers using simple open-source software or custom developments.  Is this move by Ajlan & Bros marking a turning point within the consumer base in the Middle East?

Recent research shows that 29% of Saudi males aged 51+ are willing to purchase online, indicating that the customer-base is moving from the cutting edge to mainstream1.  The single largest market in the Gulf Cooperative Council seems to be responding to the trends and desires of the B2C and B2B customers who are looking for the ability to purchase online by investing in this channel. 

And what does this activity mean for the future of retailing in the Middle East?  Though there is a lot of activity, I predict that there will be a chasm between those who are merely going through the mechanics of allowing customers to purchase online vs, those who are looking to sell online and attract, engage and delight by using the medium to its greatest advantage.  There seems to be a much deeper focus and understanding of the importance of delivering a personalized experience and supporting a multi-channel journey that ultimately rewards a sophisticated merchandising approach than I’ve encountered in the region before.  This understanding of the nuances and value that online / commerce anywhere brings is a key indicator that the market is at a tipping point and we’re going to see some impressive businesses take advantage and change the game in the region.

From an infrastructural perspective, the Middle East is a dream market for an online retailer.  Disposable income is high and mobile use is pervasive.  There are 180 mobile phones for each 100 residents in Saudi Arabia with most people carrying two devices, often both smartphones.  Tablets are not far behind. (http://www.euromonitor.com/mobile-phones-in-saudi-arabia/report) and (http://english.alarabiya.net/en/business/economy/2013/05/15/Saudi-Telecom-Wild-demand-on-a-developing-supply.html )

The leaders in the market will not be those who are merely online but those who offer seamless integration with Point of Sale, Web and Mobile integration managed by a small and nimble local team who understands the intricacies of selling into the Middle East.

I see potential for a pack of global leaders.  Who will emerge on top?  

1. Source: E-Commerce_in_Saudi_Arabia_Driving_The_Evolution_Adaptation_and_Growth_of_ecommerce_in_the_Retail_Industry_SOCG_2012June17

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