If you’re not on the e-commerce bandwagon, it’s not too late

October 30, 2017 2:52 pm

e-commerce

The year 2017 has seen a series of e-commerce acquisitions and launches and the cherry on top is the launch of Noon.com by Emaar Properties chairman Mohammed Alabbar on October 1.

Noon is billed as the Middle East’s homegrown competitor against US giant Amazon, which made waves when it acquired Souq.com, one of the biggest ecommerce platforms in the region, in March this year.

Management consulting firm AT Kearney expects e-commerce in the UAE to grow at a compound annual growth rate of 25 percent per year up to 2020, while business consulting firm Frost and Sullivan estimates that the market could be worth up to $10 billion by 2018.

In light of this prolific growth, Communicate spoke to the agencies working with e-commerce players to decode their role in this new world order.

Then and now

“E-commerce in MENA owes its growth to four flagship regional markets – the UAE, Saudi Arabia, Kuwait and Egypt – for varying reasons across markets, ranging from sheer population size and potential, to broadband infrastructure, to record digital penetration levels,” says Anna Woloszczenko, media director at Starcom.

The region is still very much behind compared to global benchmarks; a Global WebIndex (GWI) study shows that, globally, 75 percent of respondents purchased a product online in the previous month, while this number was only 56 percent in KSA and 66 percent in the UAE.

Read: There will only be one winner in the region’s biggest E-commerce battle

What’s trending?

Marie Abiad, strategic planning director, MEC, says that, while working on a travel brief, “we noticed that, surprisingly, in the region, people don’t spend as much time to book flights and hotels as they do in other parts of the world.”

Globally, consumers take 30 to 40 days from search to booking, whereas in the region, it’s seven to 20 days.

However, Stanislas Brunais, senior director – performance, OMD, says the lead time and conversion is longer – sometimes even more than 30 days. But bookings for travel within the GCC tend to be done rather quickly – a maximum of three to four days.

“Consideration happens a lot on mobile and conversion is more skewed toward desktop, either because the mobile experience is bad or because people are more inclined to share their personal details on desktop,” Brunais adds.

Considering that mobile plays a huge role in the customer journey – especially in the consideration phase, – it’s important for e-commerce players to be able to track their audiences across devices.

Then, of course, comes the issue of trust, with 62 percent of Middle East consumers worrying about having their personal information hacked via their mobile device, according to a 2017 PwC report.

Read: The e-commerce battleground between Noon and Souq.com shifts to Saudi

 What sells?

While Souq and Noon are the biggest players that come to mind when thinking of regional e-commerce, it’s not fair to ignore the travel industry and service-based players. If one were to put together a timeline to the e-commerce revolution in the region, it would start with travel, followed by fashion, then transport and then local and international brands such as Sephora or Chalhoub, explains Brunais.

Wise money

Even though footfall has been reducing across malls in the UAE according to local media reports, the Middle East – the UAE and KSA, in particular – remains a mall-driven culture. So does it then make sense for retailers to invest in e-commerce platforms?

As Rodriguez points out, this is still an industry in which clients need a lot of education. For those that have understood the importance of an online store and are willing to take the plunge, there arises another question: should they invest in their own platform or be part of a marketplace?

For Brunais, the answer is clear. Although he says brands need to be present everywhere simply because users are, the real reason lies in owning the data. “And the only way to do it is to have your own website but, if you rely only on marketplaces to sell your product, you will never get that data,” he says.

Read: Let the battle begin: how Noon.com plans to fight Amazon

 Shop talk

It’s important for brands to understand how to position themselves whether through meta tags and descriptions, or content-based tab takeovers and offers. However, pure advertising on e-commerce sites is still restricted to direct buys and traditional formats. Rodriguez suggests that this is due to e-commerce sites not wanting to lose control over who advertises on their platform and being able to change a premium sum.

What lies ahead

There’s clearly a massive opportunity for local and regional players to improve their online services. According to a 2017 KMPG report, an astounding 58 percent of online purchases in the UAE were imported. This clearly indicates that consumers are ready and willing to shop online; they just prefer to do it from global e-retailers.

Moreover, e-commerce is receiving a major push at a governmental level as well, with the creation of the Arab Federation of e-Commerce, whose five-year strategy will be instrumental in helping the industry grow from $20 billion in 2017 to $200 billion beyond 2020, as reported by local media.

 

 

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By AMEinfo Staff
AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.



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