E-commerce in MENA: Opportunity beyond the hype
9
Regional retailers and e-commerce pure players have also taken notice of the demand–supply imbalance
and the signifi cance of the e-commerce opportunity. The region is starting to see a step change in the
availability of products online.
Over the past couple of years, e-commerce has become one of the top strategic priorities for the largest
retail groups in MENA. Moving from a physical to an omnichannel model, these groups have invested
signifi cant resources in launching more than 35 new e-commerce channels since the beginning of
2017. These include brands such as Ounass, Nisnass, H&M, Mothercare, HomeCentre, Centerpoint,
6th Street, Ace, Lacoste, Swarovski, Level Kids and CarrefourNow, to name a few. Some of them
collaborated with global e-commerce players to accelerate their go-to-market strategies. Chalhoub
Group joined forces with Farfetch to launch an Arabic website, curate goods for MENA consumers
and increase local product selection by adding Chalhoub’s own concepts and franchise brands to the
platform. Mohamed Alabbar’s Symphony Investments entered into a joint venture with YNAP to
support the expansion of the global fashion e-commerce player in the region.
E-commerce pure players have also been increasing their product selections, both organically and
through partnerships. Souq’s integration with Amazon is underway and promises to bring millions
of new SKUs to the market. The company recently launched Amazon Global Store in the UAE and
KSA, with a localized website, product selection and payment methods. Building inventory quickly
has been a core focus at noon. The company has forged partnership deals with the retail groups
eXtra and Alshaya to shore up its electronics and fashion offerings. Through its partnership with
eBay, noon promises to make buying millions of new products more convenient for MENA shoppers.
With the expansion of its manufacturing and logistics capabilities in China, the company is paving
the way for a broader product selection and leveling the playing fi eld with China-based players
targeting the region.
“Penetration is low today largely due to gaps in the supply. E-commerce is still new in the region, but we are
at a turning point with a very exciting 12 months coming ahead.” Faraz Khalid, CEO, noon
The MENA e-commerce market is relatively fragmented
Souq was the fi rst entrant to the MENA e-commerce market and continues to be the market leader.
However, the market remains relatively fragmented, with the top two e-commerce players capturing
between 25% and 40% of the market. This is in contrast to most other e-commerce markets, where
the share of the top two players is typically more than 50%
(see Figure 8).
As the e-commerce market develops and competition intensifi es, some markets have seen a movement
toward consolidation. India is a case in point. In 2005, India was a nascent e-commerce market, with
a large number of players, including Flipkart and Myntra, competing for market leadership. The
market has since consolidated, with Amazon and Flipkart holding more than 60% of the market
share. Amazon has deployed signifi cant investments since entering the market in 2013, and Flipkart
has strengthened its position through a series of acquisitions of competitors, such as electronics
retailer LetsBuy.com in 2012, fashion retailer Myntra in 2014 and eBay India in 2017.