The rise and rise of e-commerce in the Middle East (page 2 of 2)

The online retailer notches up around 1,000,000 unique visitors a year and scored almost Dhs10m in its first year of business.

"The timing is right to get out to the GCC," says founder Omar Kassim. "Customers are willing to engage with us and have new e-commerce experiences so I think the cards are stacked up right."
"When we started out we were asking ourselves 'why isn't there an Amazon-like experience here?' but one of the reasons for that is because treating the GCC as a single market is a bit of a misnomer. There are a lot of barriers in place, agency issues and bits and pieces in place that mean your addressable audience is very fragmented," continues Kassim.

"While you've got access to a population of up to 50 million, you need to address them very locally, with local inventory and delivery channels on the ground. It's hard to that on a regional basis," he explains.

The payments issue

Though previously a deterrent, online payments are no longer a barrier, perhaps aside from a lack of confidence amongst a few - a diminishing faction of technophobes - but cash on delivery (COD) payments appear to remain standard fare.

Last year the Wamda, an incubation platform for entrepreneurs in Mena, hosted a conference on mobile payments. It was Aramex's COO, Iyad Kamal, announced the 300% growth in e-commerce and also shared that, as of summer 2012, only 30% of all e-commerce sales in Mena were paid for via online transactions, meaning 70% were COD. Kamal explained that COD leads to a much higher return (and therefore refund) rate - 15% compared with 2% for products paid for online. Jordan leads in terms of cash payments, followed by Bahrain, Oman, the UAE and Qatar.

However, this could be the year we start to see COD usurped with PayPal setting their sights on doubling its Mena activity over three years. The online payment provider enabled customers in seven of the region's countries to link their accounts with local banks, according to Reuters in November.

Owned by online auctioneer eBay Inc, PayPal now has one million customers in Mena, half of whom reside in the UAE. Customers previously needed a debit or credit card issued from outside the region. Since Q4 2012, shoppers in Saudi Arabia, UAE, Bahrain, Kuwait, Qatar, Oman and Jordan can now connect their bank accounts to PayPal, who plan to keep expanding across the Arab world.
Now residents of Saudi Arabia, the UAE, Bahrain, Kuwait, Qatar, Oman and Jordan can link a PayPal account to locally issued Visa, MasterCard or American Express credit or debit cards, with PayPal planning to expand this to nearby countries.

What does not hurt growth is choice. Armies of consumers are wielding cash and PayPal apps, debit and credit cards, toward a growing array of retail outlets online, backed up by social channels. There is no shortage of virtual footfall and with more shoppers accessing the internet than ever before the trend can only continue.