Online retail sales in the Middle East projected to rise two-fold by 2022
The B2C E-Commerce sector in the Middle East is on the growth path. Between 2018 and 2022, online retail sales in this region are projected to more than double. What are the drivers behind this growth trend and what major challenges still need to be overcome?
E-Commerce growth drivers in the Middle East
E-Commerce currently accounts for a small one-digit percentage share of overall retail sales in the Middle East. Even in the most advanced markets of this region, the UAE and Saudi Arabia, less than 5% of retail purchases are online. As E-Commerce outpaces traditional sales channels, it is expected to gain a higher share of the retail market, reaching double-digits in the countries of the Gulf Cooperation Council (GCC) by 2022. Both the digital buyer penetration rate and frequency of online purchasing are projected to rise. As of 2018, shoppers in Saudi Arabia and the UAE made fewer than 5 purchases per year online, compared to double-digit figures in countries such as the UK, the USA and China.
Another growth driver is M-Commerce. Smartphone is the primary mode of accessing the Internet in the Middle East, with high penetration rates across most countries of this region. Mobile is also the preferred platform for making purchases from E-Commerce websites, led by the UAE, Qatar and Bahrain. More than 50% of online shoppers purchased via mobile phones, compared to just one-third using desktop computers.
Cash payments and delivery challenge online retailers in the Middle East
As online retailing is only starting to evolve across the Middle East, many consumers still lack trust in digital transactions. As a result, local E-Commerce merchants have to cope with high shares of cash on delivery payments, preferred by more than one in three online shoppers. Furthermore, delivery itself represents another major challenge due to the lack of a formal address system in many areas. However, both factors are improving with the help of innovative technologies for payment fraud protection and geo-tagging.
For more insights on this region, see the report “Middle East B2C E-Commerce Market 2019” by yStats.com.