Update: Amazon buys SOUQ.com
It is official: Amazon is buying the largest e-commerce site in the Arab world, SOUQ.com.
The confirmation comes after many news reports suggested that Dubai’s Emaar Malls had also been in the race to acquire the online retailer.
Amazon said on Tuesday that it has reached an agreement to acquire SOUQ.com and the deal is expected to close in 2017. SOUQ.com said the acquisition is a critical next step for its growth in the region.
The news of a possible acquisition grabbed the attention of many in the business world over the past months. In January, reports said Amazon and India’s Flipkart were pursuing a deal to acquire SOUQ.com, but that they withdrew following a valuation mismatch. However, the topic resurfaced in the news this week.
In an unusual move, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, commented on the deal.
We are happy that https://t.co/IlbiEAE5cN is a success story born in Dubai
— Hamdan bin Mohammed (@HamdanMohammed) March 28, 2017
“Amazon’s entry into the region reflects the visionary foresight of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, who launched Dubai Internet City in 1999 and adopted the e-commerce and online business legislation of 2002,” he said. “Furthermore, it reiterates Dubai’s position as a regional and global hub for the world’s biggest and leading organisations, fostering [an] ecosystem that amalgamates the brightest minds, talent, thought leaders, entrepreneurs and investors from around the world.”
Gateway to the Middle East
Reuters was the first to report, citing sources, that Amazon has agreed in principle to buy the ecommerce platform, which sells consumer electronics, fashion, household items and other goods, and claims on its website that it is the largest e-commerce site in the Arab world.
For Amazon, SOUQ.com offers expertise and a foothold in a region where e-commerce is expanding quickly thanks to a young and tech-savvy population. Kuwait, Saudi Arabia and the UAE are among the top markets worldwide for mobile phone penetration.
Amazon has not provided financial details of the deal. Emaar had revealed that it made a bid of $800 million. SOUQ.com has raised $425m since its founding in 2005, according to CrunchBase. It was reported to be valued at $1 billion at the time of its latest funding round last year.
“Amazon and SOUQ.com share the same DNA – we’re both driven by customers, invention, and long-term thinking,” says Russ Grandinetti, Amazon Senior Vice President, International Consumer.
“SOUQ.com pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We’re looking forward to both learning from and supporting them with Amazon technology and global resources. And together, we’ll work hard to provide the best possible service for millions of customers in the Middle East,” Grandinetti adds.
“We are guided by many of the same principles as Amazon, and this acquisition is a critical next step in growing our e-commerce presence on behalf of customers across the region,” says SOUQ.com CEO and Co-Founder Ronaldo Mouchawar.
“By becoming part of the Amazon family, we’ll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon’s great track record of empowering sellers.”
SOUQ.com was initially launched as an Internet auction site and has since grown to become a retailer and marketplace for third-party vendors.
Middle East e-commerce
Interest is growing in the region’s e-commerce market, estimated to be worth $20bn in 2016. Last year, Emirati businessman Mohamed Alabbar teamed up with Saudi Arabia’s Public Investment Fund (PIF) and other private investors to launch a $1bn Middle East-focused e-commerce platform Noon.com.
“Amazon acquired the Chinese e-commerce company joyo.com to establish a beachhead in China in the early days of online shopping, and we believe can take lessons from that experience to better manage the growth opportunity in the Middle East,” Baird Equity Research analyst Colin Sebastian said in a note.
“Amazon is clearly interested in tapping into growth in emerging markets.”
(With inputs from Reuters)