Investment

The Gulf joins the ecommerce revolution

Whether it’s importing products from Italy or Spain or selling to customers in Germany and France, Europe has been a major market for Britain’s online retailers.

With Western Europe accounting for 50 percent of Britain’s online exports, uncertainty over Brexit is putting pressure on Britain’s online retailers to articulate a strategy to either replace that potential lost revenue or complement it with sales to less volatile regions. One of those markets may prove to be the Gulf’s emerging eCommerce ecosystem.

Why look at the Gulf’s ecommerce sector?

The gradual maturing of eCommerce platforms such as premium luxury eTailer ounass.com, and mass-market players theduaibazarre.com and wadi.com has been overshadowed by the recent decision by Amazon to acquire pioneering market leader souq.com and the impending launch of the Gulf’s biggest eCommerce website, noon.com.

Saudi Arabia’s Public Investment Fund and a group of GCC investors are funding the $1 billion noon.com venture equally. It is targeting an inventory of 20 million products and aims to grow online sales in the Middle East from two percent of the total market ($3 billion) to 15 percent ($70 billion) within a decade.

Seductive growth prospects

Commenting on the announcement of the launch of Noon.com Emaar Properties chairman Mohamed Alabbar said, “We want to turn the e-commerce market in the Middle East upside down. Noon will be a game-changing e-commerce platform.”

The retailer is building a 3.5 million sq ft warehousing facility in the Dubai World Trade Center. Other warehouses and distribution centers are planned for Riyadh and Jeddah. Noon has already tied up local distributors, brands, small vendors, and retailers. Noon’s CEO Fodhil Benturquia commented, “Our prices will be very competitive and we will offer a great customer experience. We will deliver authentic products on time and meet customer expectations. Physical stores also have the opportunity to sell on our platform.”

This dynamic environment offers opportunities for British brands and British goods to find lucrative markets under this expanding eCommerce umbrella.

As Ali Haji, head of online retail operations at the GCP Group, owner of thedubaibazaar.com observed, “We believe there are opportunities for existing players to flourish as they step up to the challenge.” Haji went on to explain, “That’s part of capitalising on the “long tail phenomenon” in the online selling space. We have seen it elsewhere, where even small niche operators can develop and even thrive in the paths cleared by the likes of Amazon.”

As Saudi Arabia and the UAE beat the path for eCommerce, secondary markets such as Egypt are building momentum, providing British exporters with significant growth opportunities in a region renowned for viewing shopping as a major recreational activity.

Potential perils ahead for British retailing

With Brexit turmoil promising to plunge the sector into uncertainty for the next two years, the Gulf offers revenue, distribution and service opportunities. Newly developed expertise in online niche segments, coupled with advances in logistics, warehousing, and delivery services are signaling the emergence of the Gulf as an eCommerce opportunity for canny investors and businesses.

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