The Middle East has produced some of the most promising tech startups of the past few years. Many of these companies work in the realm of e-commerce, which is expected to continue growing at an exponential rate for years to come, especially in the Middle East and North Africa. The e-commerce market in the Middle East and North Africa is valued at $7 billion, a staggering figure, especially considering the relatively young nature of e-commerce in these countries. The United Arab Emirates has the largest e-commerce market, although those in Saudi Arabia and Egypt are not far behind. Other major markets include Kuwait, Lebanon, and Jordan.
The growth of e-commerce in the Middle East is largely driven by creative, cutting-edge startups that use unique marketing methods. The largest driver of e-commerce growth remains social media. Facebook has emerged as a leading social channel for Arab online retailers, but other networks are also popular. For example, more than one in five Arab e-commerce companies attract customers through the photo sharing app, Instagram. The demographics of online shoppers in the Middle East vary from those in other parts of the world. Men are much more likely than women to shop online, especially in Egypt where 77 percent of online shoppers are male. Younger shoppers are more common than older ones. The primary demographic for e-commerce in the Middle East and North Africa is currently men between the ages of 26 and 35.
Moving forward, companies will need to figure out novel ways of appealing to different demographics and getting other age groups and more women interested in online shopping. With the growth of e-commerce showing no signs of stopping, it is exciting to think about the future of e-commerce in the Middle East. Some of the trends that may emerge in the coming year include:
The growth of on-demand services.
In the past few years, on-demand services have become the norm, especially with the popularity of services like Uber, which offers personalized, door-to-door taxi rides. In the Middle East, several competitors have emerged, most notably Careem, which claimed a $60 million round of financing in 2015. Outside of taxi rides, customers are now looking for other on-demand services to make their lives easier, and startups are emerging to meet these needs. Some companies to watch include Ubefit, which offers fitness-on-demand services, and washplus, a company that enables customers to have their dirty laundry picked up, delivered, cleaned, and folded.
A focus on same-day shipping.
With perishable items, fast delivery is expected. As we move forward into the future of e-commerce, the same level of service may also be expected for non-perishable items. Startups like Fetchr have emerged to help existing companies improve their logistics in order to make shipping as fast as possible. In the near future, it is conceivable that same-day shipping will set apart those companies that make it and those that do not. E-commerce sites have also begun building out their fleets to make deliveries as fast as possible. Companies have focused on last-minute shipping, ensuring that the customer experience stretches all the way to people’s doorsteps.
Mobile commerce becomes more popular.
In the Middle East, some of the highest conversion rates for e-commerce are occurring on smaller screens, especially among customers who have already made online purchases. As startup engineers become more comfortable with HTML5 and begin launching app-based shopping experiences, mobile e-commerce may become the norm. This may prove especially true considering the growing popularity of cell phones throughout the Middle East and the younger generation’s fluency with this form of technology. E-commerce startups may use mobile technology to attract younger generations.
The expansion of domestic e-commerce.
As entrepreneurial microsystems in the Middle East continue to emerge, the growth of e-commerce will likely continue in a domestic fashion rather than across borders. Markets like Saudi Arabia and Bahrain are emerging as major centers for entrepreneurship, and the companies being formed in these areas will focus on domestic services before trying to expand to other parts of the region. With more merchants available than ever before, entrepreneurs will easily find domestic partners without having to resort to international sourcing. Support for these local microsystems will play into the development of the larger entrepreneurial ecosystem of the entire Middle East.
A demand for better customer experience.
In the past year, regional retailers, travel apps, and service providers have begun releasing faster iterations in an effort to make the customer experience as smooth as possible. This rise in efficiency is largely related to increased A/B testing, improved analytics, and more focus groups. Moving forward, a larger number of startups will begin placing the customer experience at the center of everything they do since, at the end of the day, the app with the best customer experience conquers the market. This becomes especially true for e-commerce. When multiple apps offer the same products or services at comparable prices, customers will choose to use the one that delivers the best customer experience.