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Massive potential for e-commerce to thrive
Ahmed Alkhatib, founder of MarkaVIP, says the Middle East region is not particularly optimised for e-commerce.
June 27, 2013 11:47 by Muhammad Aldalou
A lot has been said about the e-commerce industry in the Middle East; it’s the world’s fastest- growing market, internet penetration is incredibly high and online payments are safer and on the rise.
Last year, it was predicted that cash on delivery (COD) – which constituted roughly 70 per cent of online transactions in the region – would begin to die out as customers turn to the comfort and convenience of online payments. And yet, during a panel discussion at ArabNet’s Digital Summit, we were told that, contrary to expert opinions, cash on delivery now represents 75 per cent of online transactions.
How is it that, with an average internet penetration of 40 per cent in the region (compared to a global 34 per cent), customers still prefer an arguably old-fashioned model such as cash on delivery?
“I don’t think it’s necessarily an increase of interest in COD, but an interest in shopping online,” says Ahmed Alkhatib, founder and chief executive of one of the region’s largest e-commerce players, MarkaVIP.
“What you’re seeing is a massive exodus of people who would normally shop offline that are now shopping online.” Alkhatib, who founded the company back in 2010, adds that customers tend to use cash on delivery for the first few purchases, at least until trust can be built.
After the first couple of deliveries, they realise that paying online is much more convenient, he says.
“With online payments, I think it’s going to be a natural progression,” he explains. “As companies like us mature and become household names in the market, people will trust our services. It happened in the United States and Europe, and it’ll happen here.”
Alkhatib says that, when the company was first launched, he quickly realised that the region, particularly from an infrastructure perspective, was not logistically optimised for e-commerce. There were (and still are) many barriers to entry; laws on imports, cross-border transportation and customs laws.
However, given that all the existing major players have managed to overcome these barriers, he believes in the massive potential this region has to offer.
“I think the industry will grow tremendously over the next three to five years,” he says.
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