What Ecommerce Merchants Need to Consider Before Entering The Middle East Market

It’s no secret that ecommerce is booming. Remarkably, global online retail sales crossed the $2 trillion mark in 2017. But the growth is just getting started; by 2021, the market is expected to double. Among the regions with the fastest ecommerce growth is the Middle East – in fact, sales volume here has increased 1500% over the past decade.

Dominated by Saudi Arabia and the UAE, the Middle East’s prodigious growth demonstrates there’s significant opportunity to further develop ecommerce in the region. More than 60% of UAE residents, and about 50% of Saudi Arabia residents make online purchases on foreign websites, with the average purchase exceeding $300 and $90, respectively.

If you’re an ecommerce veteran, there’s good reason to be looking to the Middle East to expand your business. In our recent ecommerce report at Admitad – which shares predictions for regions around the world – we go explore some crucial points for foreign e-shops to consider when entering the Middle East region. Here’s a few:

Huge Population of Young People

In the UAE, 64% of the population is younger than 31, and a staggering 75% of Saudi Arabians are under the age of 35. In other words, the two regional leaders in ecommerce are dominated by a generation of people who are much more inclined to be online than their predecessors. In fact, more than 70% of all online transactions in the UAE are generated by people under the age of 31.

Younger generations in the Middle East are also using social media to find new products and share things they like – and to eventually execute purchases on the internet. Companies that sell products and services available exclusively online for purchase — such as hotel and airline bookings — transitioning to the Middle East tend to have good results, because there is no new training needed for consumers. The consumers in this market already know how to buy using an internet connected device, which takes us to the next point.

Active Smartphone and Social Media Users

This may be less of a surprise considering the sheer quantity of young people in the region. As stated in the Admitad report, 65% of residents of Saudi Arabia are active smartphone users. In the UAE, the figure is 80%. With this in mind, ecommerce retailers should know at least half of all online purchases in 2017 from both countries were made using a smartphone (more expensive purchases tend to happen on a desktop or PC).

If ecommerce retailers are not ready to sell to consumers on a mobile platform, they are not ready to break into the Middle East. Further, they need to consider in-app advertisements and advertising on Instagram, which is considered the most influential social media platform for ecommerce. A study conducted by payment gateway PAYFORT found that 42% of respondents were influenced by Instagram to make an online purchase.

But Instagram isn’t the only social media platform ecommerce retailers need to pay attention to. Snapchat is especially popular in Saudi Arabia – in fact, between 21%- 25 % of the population uses it daily.

Ramadan is Peak Season for Online Retail

Ramadan is the ninth month of the Muslim calendar year. During this time, Muslims spend time fasting, praying – and as it turns out, shopping online.

It’s absolutely imperative that ecommerce retailers moving into the Middle East be aware of when Ramadan falls every year: online sales increase by 24% in the UAE and by 15% in Saudi Arabia during Ramadan. In the UAE, consumers look to buy products from American retailers during this time — especially clothing, jewelry and electronics.

And while Ramadan has become a time when people exchange gifts, it’s not the only peak time for online shopping in the region. The American “Black Friday” holiday is also very popular in the Middle East (however it goes by the name “White Friday”).

How people pay is both different – and changing

Compared to the United States, where online shoppers make payments exclusively over the internet, consumers in the Middle East tend to pay on delivery. But the trend is reversing. Payment on delivery dropped by 38% in Saudi Arabia in 2017, while credit card use for online purchases grew by 64%. Whether it be through credit, debit or an online transaction services like PayPal, vendors in the Middle East need to be ready to sell via all possible online payment methods, in addition to payment-on-delivery.

Ecommerce retailers have plenty of reasons to look to the Middle East for growth. The region is by no means a “frontier” in online selling but the potential here is enormous. Once you’re able to set up a marketplace and  take into consideration all of the points discussed here, you’ll be well on your way to succeeding in the Middle East.

Artem Rudyuk is the Head of GCC and MENA Operations at Admitad

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