As the retail industry tries to find ways of mitigating the damage caused by Covid-19, cross-border expansion has never been so important. We’ve analyzed the Middle East, a growing ecommerce market that should be on the radar of any brand looking to expand their ecommerce customer base.
The Middle East
There are 411 million people across the Middle East, with 75% able to access the internet. Overall, the region has a high rate of internet and smartphone penetration. The United Arab Emirates (UAE) leads the way in that regard, sitting at 100%, while Qatar, Lebanon, and Saudi Arabia are close behind, all with over 92%. Part of this may be a result of the region’s young population, as the average age in the Middle East is 25.
Ecommerce has been growing consistently in the region, particularly the UAE and Saudi Arabia. Ecommerce in the UAE is predicted to be worth US$8 Billion in 2021, to reach US$12 billion by 2025.
Social media is very popular in the Middle East with an average of 86% of internet users using social networking, compared to 71% in the U.S. and 65% in Europe.
Mobile social media penetration in the region has more than doubled to 44% in the past five years.
The Gulf Co-operation Council (GCC), is a political and economic union of Arab states bordering the Gulf. The countries included in this union are the UAE, Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain. Of all the regions that fall under the MENASA (Middle East, North Africa, South Asia) umbrella, the ecommerce spend in the GCC is expected to grow more than any other area.
United Arab Emirates (UAE)
In the UAE, ecommerce revenues are expected to reach US$12 billion by 2025, with 60% of shoppers based in Dubai.
Average Spend Per Online Transaction
Shoppers in the UAE are some of the biggest online spenders, spending more than any other country in the MENASA region at US$1,231 per shopper per year.
The average spend per online transaction is also much higher than the average for other markets, despite having decreased since 2016. While in other mature markets, the average online transaction is US$79, the UAE is almost 1.5 times that at US$122.
Brands in the apparel and accessories category will be interested to see that this is an area that has been consistently growing in the UAE, with percentage of shoppers doubling from 2016 to 2019.
Purchasing cross-border is already commonplace within the UAE, as nearly half will buy items domestically and cross-border, while 12% make only cross-border purchases. As the UAE presses on with its growth, this is likely to continue.
Saudi Arabia is another important ecommerce market. It has a young, tech-savvy population, with 75% of the inhabitants under 36. Of its 15.6 million internet users, 3.9 million are making online purchases.
Ecommerce makes up just under 50% of the digital revenue in Saudi Arabia, with the next highest, eTravel, making up a much smaller percentage (28.4%).
Rapid growth in ecommerce revenue in Saudi Arabia is expected over the next few years, with digital revenue expected to increase from US$4.9 billion to US$7.9 billon in the space of 5 years. The average revenue per ecommerce user is anticipated to be US$234.15.