Cart in the Web
Could online retail alter the way we buy things in the region?
April 28, 2011 3:41 by Sidra Tariq
E-commerce has been in the region for a while now. But as years pass, new models of consumer spending emerge on the online stage. In this cover package, we look at two growing trends under the wide e-commerce umbrella: online retail and group-buying websites. Below, we look at the status of online retail in the region and the challenges it faces. And in later in the package, we look at group-buying sites and the opportunities they offer to subscribers and partners.
People in this region love to shop. The city of Dubai is a testament to that. Just think of the number of malls that have been built over the past 30 years in this tiny emirate. The number of stores that are opened every year in those malls and the number of people flocking to the stores in those malls.
The GCC is a region full of consumers with a high disposable income who love to buy things. There are any number of opportunities to expand the retail base but many ask whether or not shopping can – or should – expand online as well.
Online shopping is moving at a slow pace in this region and when we narrow it down to online retail – buying physical things, as opposed to services such as flights and hotel bookings – the pace is even slower.
Only three in 10 Internet users in the Middle East and North Africa purchase goods and services online according to a survey of almost 7000 Internet users across the Middle East and North Africa. The survey, conducted by online research company Effective Measure and Spot On Public Relations last September, also shows that the GCC is the most active part of the MENA region in online shopping, with around 43 percent of Internet users buying products and services on the Web. This is still lower than more developed markets such as the UK, where the figure is 62 percent.
SLUGGISH START. “Right now, we are so unbelievably far behind, it’s not even funny,” said Alexander McNabb, group account director at Spot On. “We seriously lag behind markets like the UK and the US when it comes to online retail.”
However, he added that 2011 may be the year where we start seeing the Middle East “becoming a viable and exciting market [for online] – because we have already seen some movements in that direction, but also because of the innovation that is now in the region.”
“In 2011 we will see a start of what will be an explosive growth and huge change in the way companies deal with consumers and the way consumers deal with brands. We’re going to see some very big changes in consumer behaviour,” he said.
“People have started to wake up to the potential and there is an enormous opportunity in the Middle East,” he added. “When you combine that with the rise of digital entrepreneurialism, there is reason to be hopeful that we’ll get to see enormous expansion and activity in that area.”
There has been online buying in the region for some years, with consumers purchasing airline tickets and making hotel reservations. A host of Web shoppers have also been buying from international websites and having their products delivered to them by courier or shipping services. But only in recent years has the region seen the emergence of its own shopping websites.
Souq.com was one of the first shopping websites in the region. Although it started off as an auction platform that allowed individual buyers and sellers to trade online, it slowly developed into a retail website, where individuals and businesses can now sell products. It no longer hosts auctions.