The global retail landscape has undergone a remarkable transformation over the past decade, with the Middle East emerging as a vibrant and rapidly growing hub for ecommerce. The current digital revolution has reshaped consumer behavior, disrupted traditional retail models, and ignited economic growth across the region.
In this article, we unravel the statistics and trends shaping ecommerce in the Middle East in 2023. From traditional commerce to virtual storefronts, we'll discover how this transformative force is shaping not only the retail industry but the very fabric of economies and societies across the region.
Introduction: The rise of ecommerce in the Middle East
In a span of just a few years, the Middle East has transitioned from being a retail market reliant on brick-and-mortar stores to one where the click of a button has become the norm for shopping. This monumental shift is the result of various factors, such as the evolution of consumer preferences, technological advancements, and the impact of unprecedented global events like the COVID-19 pandemic.
Over the past decade, ecommerce has witnessed unparalleled growth in the Middle East. This surge can be attributed to the region's increasing internet penetration, the proliferation of smartphones, and changing consumer behaviors. The allure of online shopping, convenience, and the ability to explore a wide range of products from the comfort of one's home have all contributed to the rapid adoption of ecommerce platforms.
Yet, the story of ecommerce in the Middle East is not solely one of convenience; it's also a tale of resilience and adaptation. There have been significant challenges facing the industry. Traditional retail, which once dominated the landscape, was hit by the COVID-19 pandemic. Lockdowns and social distancing measures led consumers to explore the world of online shopping in ways they had never done before. This unexpected twist acted as a catalyst, accelerating the ecommerce revolution in the region.
Ecommerce in the Middle East: Poised for substantial growth
Let’s first look at some statistics around the growth of ecommerce in the Middle East and its projected value.
The ecommerce sector in the Middle East is estimated to reach a market volume of US$50 billion by 2025. There are several factors that support this projection, such as the widespread use of cutting-edge technologies and favorable government initiatives that promote digital economies. In addition, the region's young and tech-savvy population, along with rising disposable incomes, presents a vast consumer base for expansion in the online retail industry.
When talking about the ecommerce market in the Middle East, it is important for us to consider the Gulf Cooperation Council (GCC) alliance. The GCC consists of Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman. While the GCC is smaller than the MENA (Middle East and North Africa) region, this alliance is essentially the bellwether of ecommerce in the Middle Eastern market as they have the common goal of building successful economies based on ecommerce.
The demand and growing number of online buyers promise constant growth in this market. Recent statistics from Checkout.com on the digital transformation in the Middle East has shown that:
- Internet penetration is close to 100%.
- 91% of consumers across MENA purchased products online.
- 70% of consumers across MENA prefer to use a digital payment method (this figure is even higher in GCC, at 80%)
Next, we will look at the various aspects that have shaped the trajectory of ecommerce in the Middle East, from the diverse landscape of product categories to innovative shopping platforms, technologies and trends propelling it forward.
Products, preferences, and progress in the Middle East
Product variety is a hallmark of the Middle East's ecommerce boom. Fashion and clothing have seen a remarkable surge, making up 46% of all online purchases in the region. Online marketplaces and dedicated fashion sites offer a plethora of options, bringing global trends to local fingertips.
Electronics and home goods rank close to the top, riding high on increasingly tech-savvy consumers and smartphone adoption. Shoppers flock to online platforms for gadgets and essentials, enjoying doorstep convenience and an extensive range.
Groceries and personal care products also witnessed unprecedented growth during the pandemic. Checkout.com’s report also mentioned that over 53% of MENA consumers purchased food online in the past year. Online food delivery in particular has transitioned from skepticism to routine, driving the success of innovative delivery companies such as Talabat (subsidiary of Delivery Hero), Deliveroo and Careem (subsidiary of Uber).
The above findings exhibit the diversity of the ecommerce landscape in the Middle East, and how online businesses in the region are able to adapt and redefine retail.
Ecommerce platforms and technology: Pioneering personalized experiences
The Enterprise eCommerce Leader Report EMEA 2023 report from Storyblok delves into the choices of over 3,500 online stores in the Europe, Middle East, and Africa (EMEA) region, revealing a frontrunner among ecommerce platform providers. Notably, 33% of EMEA ecommerce companies opt for the open-source solution Magento, demonstrating its pivotal role in shaping the digital landscape. Salesforce Commerce Cloud and Shopify follow with around 18% and 11% adoption rates respectively. Salesforce, WordPress, and HCL Commerce in particular are prominent and have technological influence that extends globally.
In the Middle East, Orienteed emerges as a powerful ally in employing the best ecommerce development strategies. It addresses the unique challenges faced by ecommerce businesses in the region, from accommodating specific needs of B2B companies to supporting intricate payment features. Orienteed serves as a bridge between tailored solutions and expansive regional reach, allowing businesses to create marketplaces ranging from localized ventures to enterprises that span the entire MENA region and beyond.
Beyond platforms, technology's marriage with personalized experiences comes to life through the utilization of Artificial Intelligence (AI) and Machine Learning (ML) to tailor the digital shopping experience, improve product recommendations, and boost customer service. In addition, Virtual Reality (VR) and Augmented Reality (AR) have transformed how consumers engage with online platforms, allowing them to virtually interact with products before making purchase decisions. As the Middle East's ecommerce advances, technology remains one of its driving forces.
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Government initiatives and support
Governments in the Middle East have recognized the potential of ecommerce and have actively steered its growth through strategic initiatives and support systems. Recognizing the pivotal role of digital infrastructure, governments have invested significantly in digital infrastructure, such as the establishment of high-speed internet connectivity and robust online payment gateways.
As a core component of their respective Vision 2030 plans, the UAE, Saudi Arabia, and Kuwait have each launched a number of significant digital initiatives. Bahrain also recently announced plans to invest more than $30 billion across 22 signature projects in key industries. And similarly, Qatar's ongoing TASMU seeks to comprehensively deploy solutions and cooperation across priority sectors.
Other key focus areas include regulations supporting online businesses and the promotion of digital literacy. According to Wamda, the ecommerce sector in the GCC is finally netting the benefits of improved regulatory support, government promotional initiatives, and heightened interest from entrepreneurs and business leaders in the private sector.
Governments have also established dedicated ecommerce zones, offering incentives for businesses to establish their operations and fostering an ecosystem that supports innovation. One example is the Dubai CommerCity (DCC), a dedicated free zone to propel ecommerce growth in the MENA region. From streamlined registration to pre-integrated platforms, DCC offers a comprehensive ecosystem for global and regional brands as well as business incentives such as 100% foreign ownership, no corporate or income tax, and 100% repatriation of capital and profits.
Emerging ecommerce trends: Mobile, social, and cross-border commerce
A series of impactful trends are reshaping the ecommerce landscape in the Middle East.
Mobile commerce, or m-commerce, stands tall as a dominant trend in the Middle East. Over 80% of buyers in the region use mobile devices. With a widespread adoption of smartphones, consumers are increasingly turning to their mobile devices for browsing, shopping, and completing transactions. In response, retailers are meticulously optimizing their websites and tapping into mobile payment solutions to enhance the shopping journey.
The Middle East is also seeing a rise in social commerce, which blends ecommerce with social media platforms. The lines between marketing, engagement, and transactions blur as social media channels emerge as influential marketing and sales channels. Recent statistics show that over 70% of consumers use social media to reach the seller. Consumers are now discovering products, engaging with brands, and purchasing products directly through platforms such as Instagram and Facebook. Social media influencers, interactive content, and seamless integration with online stores all play a pivotal role to boost engagement and conversion for online retailers.
Cross-border ecommerce has also surged in popularity, marking a significant shift in consumer habits. Middle Eastern shoppers are now exploring international online platforms to access an extended array of products that may not be readily available locally. As this trend takes root, digital retailers are extending their reach across borders. By offering international shipping options and crafting localized experiences, they cater to the growing appetite for globally sourced products.
Conclusion
The ecommerce evolution in the Middle East has given birth to an era of retail that bridges tradition and technology. Its journey is one of transformation, innovation, and boundless possibilities. From implementing innovative platforms, leveraging cutting-edge technology to favorable regulatory frameworks, the trends point towards a clear commitment to nurture a thriving ecosystem that empowers digital businesses, this landscape is a testament to the region's dynamic spirit and forward-looking approach.
Whether you are a growing business or an established digital presence in the Middle East region, there is a partner that understands the nuances of this evolving journey. Orienteed's ecommerce development services are tailored to suit your needs, whether you're starting small and aspiring to take that next step, or seeking to refine your established digital presence.
If you need help with your business strategy and digital transformation, don't hesitate to contact us. We are here to help you succeed in an increasingly digital world.
Marketing & Sales Assistant at Orienteed.
