Ecommerce is the fastest growing sector in the Middle East but it is not expected to replace offline retail any time soon. The growth of ecommerce is substantial enough for big retailers to consider expanding their services to the online marketplace. Online shopping has a big advantage over traditional medium because of the ease of use. Today users can search for products and services and make an informed purchase decision without having to leave the home. Deep mobile penetration and improvement in logistics has improved the ability to reach remote areas in the GCC which are poised for substantial growth.
A reason for the fast growth of ecommerce sector in the Middle East is price. Most products that are offered online are cheaper because of the elimination of additional costs like labor and rental. Price can play a pivotal role in customer decision particularly to those who are rather price-sensitive. Since logistics issues in the GCC have been resolved, expect a massive opportunity for the ecommerce market in the region.
To date the ecommerce market in the Middle East is valued at $4.9 billion but it is expected to reach $10 billion by 2018. The United Arab Emirates (UAE) has the highest percentage of online shoppers. At least 33% of web users in the Gulf make use of the internet to research and buy products. A study further revealed that among the GCC countries, at least 43% have reported making at least one online purchase in a month.
Another substantial development in the last few years was the security measures taken by ecommerce sites and banks against credit card fraud. In 2011, cash on delivery sales accounted for 40% to 50% of businesses but the number has gone down to 15% to 20%. Smart payment is now becoming the trend because it is user-friendly and ensures customer safety against online fraud. Security of online payments is the biggest challenge for online businesses which they have satisfactorily overcome.
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