In its new publication, “Middle East B2C E-Commerce Market 2018”, Germany-based secondary market research company yStats.com studies the development of online retail in nine countries of the region. A common finding across these nations is the projection of continued growth of E-Commerce sales, driven by advances in Internet connectivity and improvements in logistics and payment infrastructure.
The countries of the Middle East are seeing rapid growth of online retail sales, as yStats.com’s report shows. In the UAE, top market in the region, B2C E-Commerce sales doubled between 2015 and 2017, with a projection of further growth at annual rates of above +20% through 2021. The neighboring Kingdom of Saudi Arabia is expected to see even higher growth rates and overtake the UAE as the largest online retail market of the Gulf by the turn of this decade. The combined E-Commerce sales of the Gulf countries are expected to more than double between 2017 and 2020. The main growth drivers include high rates of Internet connectivity among the population, reaching above 90% in countries such as Bahrain, Qatar and the UAE. Furthermore, more than nine in ten consumers in the UAE, Qatar and Saudi Arabia owned a smartphone.
Other countries of the region also enjoy strong development in B2C E-Commerce. In Iran, less than 1% of total retail sales are currently online, but this share could triple over the next two years, as a higher share of the relatively large population gains Internet access and embraces the benefits of online shopping. In Lebanon, the online travel sector is still larger than online sales of physical goods, although apparel overtook airline tickets as the most popular online shopping category. Retail E-Commerce in Lebanon, however, has some room for growth as local online retailers rise to rival cross-border competitors such as AliExpress and Amazon. Overall, the attraction of international online marketplaces is strong across the Middle East, and is especially pronounced in Israel, where more than one-third of all B2C E-Commerce sales stem from international sites which consumers prefer due to lower prices.
A number of barriers still remain on the Middle East’s path to online retail saturation. These include the prevalence of cash on delivery over other payment methods and consumer wariness of safety of E-Commerce and online payment transactions. Furthermore, a number of countries lack a unified address system which, on the one hand, creates challenges for last-mile delivery and, on the other, forces delivery companies to innovate, such as using mobile apps to verify the customer’s exact location. Local governments also pursue various initiatives to improve logistics and payment infrastructures and support the growth of E-Commerce.