Why is Etisalat a good deal for Noon and vice versa?
Noon, the newly launched e-commerce website, signed a deal Monday with Etisalat to sell the telecom company’s products on its platform, according to a statement shared by Etisalat with AMEinfo.
The statement said that Noon would sell Etisalat’s products on its platform, including pre-paid and post-paid SIM cards, e-life products as well as Etisalat’s mobile devices.
The deal, which was signed between Noon Founder Mohammed Alabbar and CEO of Etisalat Saleh Al Abdooli, took place on the sidelines of GITEX Technology Week.
Chief Executive Officer of Etisalat Group Saleh Al Abdooli said: “We are proud to be associated with Noon, UAE’s homegrown e-commerce platform giving our subscribers an option to purchase online and bringing in efficiency and flexibility for these customers. That is in line with our overall strategy to move towards a digital future and make it a reality.”
Noon is trying to attract giant retailers to enrich its website with a broad range of products, in an attempt to compete with major e-commerce platforms, such as Souq.com, which is acquired by Amazon.
Mohamed Alabbar, Founder of Noon, said: “Our partnership with Etisalat, the leading telecom provider, to offer its products and services is a testament to our growing retail partnerships. Such great supplier relationships, which add value to our customers, is at the heart of Noon. We will continue to focus on working with regional brands and service providers, in order to offer relevant and quality products that meet the lifestyle aspirations of our customers.”
By the end of September, Noon also sold a stake to Alshaya, enabling the huge retailer to sell its international brands on Noon’s marketplace platform.
The latest move by Noon in this direction is its MoU with Etisalat. But why is this an important step for Noon?
Etisalat is huge
Etisalat is the top telecom company in the Middle East and Africa region with Market capitalization of $47 billion and aggregate subscribers reaching 162 million in 2016.
According to a report issued by Etisalat in 2016, the active subscriber base in the UAE grew to 12.3 million subscribers in 2016, representing a year on year growth of 6 per cent.
The report said that the subscriber growth was driven by strong performance of mobile and eLife segments.
It also said that the mobile subscriber base grew year on year by 7 percent to over 10.4 million subscribers, representing a net addition of 0.7 million subscribers, of which 27 percent was in the high quality postpaid segment.
Moreover, the majority of the Group’s revenues, profits and assets relate to its operations in the UAE. Outside the UAE, the Group operates through its subsidiaries and associates in seventeen countries.
Etisalat’s broad range of products and huge base of customers will likely allow Noon to leverage the telecom company’s customer depth and breadth towards its own portfolio of products and services, through co-branding techniques.
Customers will be able to benefit from greater flexibility as they purchase these products and have them delivered at their doorsteps.
As with every new launch in traditional or e-commerce settings, Noon could be launching Etisalat’s products at discounted prices on the occasion of the new deal.
Will competitors strike similar deals?
The UAE’s second largest telecom company ‘du’ has acquired a license from British entrepreneur Richard Branson’s privately owned Virgin Group, in order to operate Virgin Mobile-branded services in the country.
AMEinfo tried to contact Du to see whether it was seeking a similar deal with Noon or Souq, in order to match Etisalat’s strategy to move towards a robust electronic platform, but to the date of publishing of this article, no comment was provided.
However, Souq.com will likely do its best to grab the biggest market share in the region and reduce the impact of competition by Noon.