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Online retail sales in Middle East still low – yStats

January 24, 2014 (Germany)

Hamburg based secondary research company yStats.com has released a new report on business to consumer commerce conducted electronically.

The “Middle East B2C E-Commerce Report 2014” indicates that E-Commerce in the region has grown significantly in recent years, and is prepared for a boom, as internet connections spread and the population becomes more familiar with online shopping. Growth rates of around 20% per year are expected for the next few years.

According to the findings of this report, B2C Commerce presently accounts for less than 1% of total retail sales in the region, as there are obstacles to overcome to prepare the way for the boom. 

These obstacles include the low adoption of the online retail channel by local businesses, the predominance of cash on delivery payments, and low consumer acceptance of online shopping, compared to international benchmarks. Still, a few markets lead the region in adoption of E-Commerce.

The UAE, Saudi Arabia, Qatar and Israel together account for around half of all sales in the region.  The product categories that produce the most revenue in online sales in the region were consumer electronics, computers, and jewelry, including watches. Online shopping for clothing also has begun to gain in popularity.

Mobile commerce has a high potential in the Middle East, as smartphone and tablet penetration is high, and mobile is often the most common mode of connection to the internet in the region. M-Commerce accounted for 10% of all B2C E-Commerce in the region in 2012, with this share expected to double by 2015.

Local merchants serve the region

Several fast growing local merchants have emerged in response to the developing interest in B2C E-Commerce in the Middle East. Among them are mass merchants JadoPado and Alshop, and online electronics store EmiratesAvenue. Three other regional merchants, online mass merchant Souq.com, online fashion store Namshi and flash sales site MarkaVIP together garnered over USD 70 million of investment in 2012.

Nevertheless, International sites Amazon and eBay are among the most popular shopping destinations of online consumers in the Middle East, though behind regional player Souq.com in terms of annual spending per shopper. Due to relatively low adoption of the online channel by local merchants, cross-border Internet shopping is common. There are even special services that assist consumers in buying from International websites and getting their orders delivered.

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