Who wants a slice of this $15 billion pie?

Do a quick Google (or any other search engine) search for ‘e-commerce Middle East’ and you’ll notice a whole host of upcoming events dedicated solely to this topic. With a predicted spend of $15 billion by 2015 it’s not hard to see why this market is proving to be rather exciting.

With great interest, potential for growth and existing infrastructure ready to be utilised- what is it that has thus far held the growth of the Middle East e-commerce market back?

Living in the UK and being so completely at ease with the concept of shopping online it’s hard for me to grasp why everyone doesn’t do it?  It’s so easy! Then I remember how annoying it is trying to anticipate delivery- will I be in to sign for it? Can it be left with a neighbour? Will it take forever to arrive? (This is a topic you may remember Ti’s very own Lilith Gardiner lamenting in a previous blog entry).

Its delivery concerns similar to these which are among the biggest problems for those looking to take advantage of the e-commerce potential in the Middle East.

Potential e-commerce consumers also point toward other concerns limiting market growth such as mistrust of payment options as well as reluctance to engage with international companies such as eBay and Amazon. Consumers tend to prefer locally recognised companies with familiarity and a proven track record of service instead. Both of these reasons highlight the overall concern of potential fraud in the market.

As demonstrated by the estimated 90 million internet users in the region it’s not a lack of target audience which is hindering e-commerce growth; it’s a lack of trust.

Payment remains one of the most troublesome areas for companies looking to expand in to the Middle East e-commerce market. There remains in the region a preference for payment upon delivery rather than pre-payment via credit card or similar. This will continue to provide its own logistical challenges for companies to overcome.

Companies looking to take advantage of the immense potential in the region and grab a piece of the $15 billion e-commerce pie will have to work hard on gaining trust. Once that has been achieved (and I’m not suggesting it’s something easily won) the market has an incredible opportunity to flourish.

It’s near enough impossible to grasp the nuances of the e-commerce market in the Middle East in such as short blog entry. However, it is a topic which Ti’s Senior Analyst, Cathy Roberson, is excited to tackle at our upcoming Emerging Markets conference to be held in Dubai from 4th-5th June 2014. Take a look at our recent infographic for more information on what to expect from the event.

You may also find Cathy’s blog to be an interesting read full of topics which interest you.

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3 thoughts on “Who wants a slice of this $15 billion pie?

  1. The opportunities for e-commerce in the Middle East are indeed great and I’m really looking forward to a great conversation on the topic at our conference! Much of the growth so far is still focused on services such as acquiring tickets and such rather than e-retailing. However, start-ups are on the increase in this region and there is even talk about utilizing drone delivery for parcels! While trust and payment alternatives are issues another one to consider is customs and regulatory issues. Check out Ti’s brief on this issue: Middle East e-commerce growth hindered by government regulations – December 3, 2013 (http://transportintelligence.com/content/countries-regions/middle-east/briefs/). Aramex seems to be taking the lead in the region’s ecommerce logistics space – they’ve introduced some innovative solutions and have also been quite vocal on infrastructure/regulatory hindrances.

  2. Pingback: Unlocking Potential in the Middle East: A Ti Conference | the Ti blog

  3. Pingback: A Different Kind of March Madness | the Ti blog

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