E-commerce takeover: Amazon and SOUQ.com complete acquisition
Amazon and SOUQ.com confirm the official completion of the acquisition of SOUQ.com by Amazon. As the first step of integration, customers can now log on to SOUQ.com using their Amazon credentials. Joining the Amazon family enables SOUQ.com to continue to bring even more products and services to customers in the region and further expand “Fulfilled by SOUQ” to empower sellers.
In Souq.com, Amazon has acquired a well-established market player with nearly 23 million online visits in a month. Adviser Goldman Sachs described the deal as “the biggest-ever technology M&A transaction in the Arab world”.
Alabbar-backed Emaar Malls Group, the retail unit of Emaar Properties, had also tried to buy Souq.com with a reported bid of $800 million, but the deal did not materialise. Amazon’s winning bid for Souq.com was not disclosed, nor was the reason why Emaar’s bid fell through.
SOUQ.com CEO and Co-Founder Ronaldo Mouchawar said: “It is an exhilarating time for the e-commerce industry in the region. Together with Amazon, our goal is to offer our customers the widest product selection, great prices, improved delivery times and first-rate customer service. Integration of Amazon’s technology and global resources with our local expertise will help us to offer a great service to our loyal customers.”
Russ Grandinetti, Amazon Senior Vice President, International Consumer said: “We are excited to be able to provide our customers in the Middle East with the benefit of easy access to SOUQ.com using their Amazon credentials. We are working to quickly integrate SOUQ.com and Amazon capabilities, in terms of both customer experience and fulfillment, to provide an ever-improving shopping experience for customers in the Middle East.”
With more growth expected soon – the Gulf e-commerce market is expected to grow to $20 billion by 2020, according to a report by global consultancy firm A.T. Kearney – it’s no secret that M&A (mergers and acquisitions) are the new mantras of success for the Middle East region’s e-commerce industry and recent deals are only serving to increase the competition in the space.
Here are some of the biggest developments in the region’s e-commerce sector this year:
Alabbar acquires Namshi
Emaar Malls Group has agreed to acquire a 51 per cent stake in fashion e-commerce site Namshi for $151 million, marking the latest move by Emirati billionaire Mohamed Alabbar in the space.
In a statement on May 24, both companies said the agreement included investment in Namshi for future growth with shareholder Global Fashion Group, a company backed by Germany’s Rocket Internet, retaining the remaining 49 per cent stake.
Both sides have agreed to jointly develop the company until a possible listing or full transfer of ownership takes place.
Emaar Malls will support the site with access to fashion brands, the ability to further develop its logistics infrastructure and help expand its footprint in adjacent countries, according to the statement.
“The acquisition of a majority stake in Namshi underlines our digital-driven strategy to leverage the growing e-commerce market in the Middle East and North Africa region. Namshi offers a perfect fit for Emaar Malls in accelerating its focus on multi-channel retailing and creating long-term value for its stakeholders,” said Alabbar, chairman of Emaar Malls and Emaar Properties.
Namshi is one of the Gulf region’s earliest e-commerce players, having launched in 2012. The site now offers 50,000 products and has 750,000 customers across the UAE, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain, with products shipped from a warehouse in Dubai.
The company had net revenue of $151m last year, which was also its first full-year of profitability and positive cashflow, according to the statement.
The all-cash deal is expected to close within three months.
Noon causes a stir
Noon, the internet venture of Mohamed Alabbar and Saudi Arabia’s Public Investment Fund, was dealt a blow ahead of its launch with the departure of its CEO and a number of staff on May 19.
In a statement on May 16, Alabbar said Noon was on track to launch in 2017 and was establishing partnerships with a range of regional retailers, distributors and global brands.
Chief executive Fodhil Benturquia was among the staff to leave this month but there is no clear indication of how many have left. “Due to the shift in our operational base and the need for even greater efficiencies, there have been nominal staff reallocations and changes,” a Noon spokesman said.
Alabbar, a prominent Emirati businessman, said last year he had teamed up Saudi Arabia’s Public Investment Fund and other private investors to launch Noon, a Middle Eastern-focused online shopping platform.
At the time, he said Noon would launch operations in Saudi Arabia and the UAE in January 2017.
Big business behind JadoPado takeover
A technology fund led by Alabbar also acquired UAE-based e-commerce and online marketplace website JadoPado, an Alabbar spokesman told Reuters on May 11.
In a statement posted on its website on May 1, JadoPado CEO Omar Kassim said the company was closing down following the acquisition, whilst his team was moving on to new projects.
Kassim told AMEinfo: “We’re incredibly excited to exit to what is fast shaping up to be the region’s most exciting digital and e-commerce play. Mohammed Alabbar’s vision to make digital a cornerstone of his future strategy led us to believe that this was the right call and will help propel our business to the next level.”
Though the JadoPado website is directing customers to the company’s blog, the JadoPado hotcake was available till May 25.
“The JadoPado team will be moving into executing great new work and this unfortunately means that we’ll be closing down the JadoPado marketplace as well as JadoPado hotcake,” added Kassim.
Alabbar, the founder and chairman of Dubai’s Emaar – the developer behind the world’s tallest tower, the Burj Khalifa – has increasingly focused on technology investments and e-commerce over the past year, also buying a stake in regional logistics firm Aramex.
In a further sign of his ambitions in the market, Alabbar has bought a stake in Middle East Venture Partners (MEVP), a venture capital firm with more than $120m of assets under management, MEVP said on May 18.
Watch this space for more updates.