When was the last time you bought something online from the Middle East? For many of us who are comfortable shopping online in general – and have also experience e-commerce in this region – the answers will range from rarely to occasionally. For many others the answer is never, or even more likely that there’s not really that much to buy online from/in the Middle East…what are my options?
The honest answer revolves around some variation of the fact that there really isn’t much to buy online in the region. I contend that the reason is not because those of us here don’t have credit cards, or don’t feel comfortable buying online, but that there is a dearth of opportunities to buy online here and this is fuelled by the challenge in setting-up an e-commerce platform rather than the resistance from the consumer.
Why do I say that? Let’s look at some numbers in no particular order:
I’ll use an example that I know well: Bayt.com is one of the most-visited websites in the region with roughly 1.5+ million monthly unique visitors. One of the greatest sources of that traffic is the UAE. While Bayt does have an e-commerce element (job seekers and employers can purchase either CV services or recruitment services online respectively) it is not an e-commerce webstie per se. One would argue that it gets this much traffic because it is not an e-commerce website, since no one here uses ecomm and the site would get less traffic if it did. However, looking at Google trends shows us that Amazon.com gets more traffic from the UAE that Bayt.com. People are shopping online from here to the other side of the planet in greater numbers than they are looking for new opportunities here. The Shop & Ship guys can attest to this. Similar-ish numbers hold true when comparing souq.com to ebay.com. The apples-to-apples comparison is that clearly there is a strong interest in online shopping from this region – even to the extent that people are willing to cross the hurdle of shipping fees and currency conversion to make that buy.
Recently I conducted some research on credit card usage in this region.
- 80% of respondents have a credit card
- 70% of respondents use their credit card for online purchases
- 40% of respondents buy online once per month or more
- 56% of respondents are somewhat to very comfortable buying online from Europe, 59% from North America, but with the largest group of respondents from the GCC and Levant saying that buying from this region just hasn’t even been an option
- 49% of respondents site the chief reason for hesitation or lack of online shopping from this region is the lack of options
- and when asked what would increase their confidence in buying online from the region 55% said trust that the site would run error-free, 53% said clear signs of audit and verification, and 50% said clear transparent customer care
When a similar question to the last was asked on Bayt.com that limited respondents to one answer:
- 26% of respondants will always remain sceptics
- but that means 74% of people are open to measures to increase that confidence – primarily to the tune of 27.5% agree with the need for clear signs of audit and verification (in other words, that the gateway looks and operates as it should and because someone else says it does)
So let’s round this out with what I can buy online here with a credit card:
- airline tickets
- hotel bookings
- event tickets
- CV services
- recruitment services
- auction items
- anything else…?
Some preliminary conclusions are that:
- people have credit cards – google the recent MasterCard info on credit card penetration in the region
- people are shopping online – but primarily from outside the region
- people are open to shopping online in the region given trust that the gateway will work, its safe, and that they can contact someone if there’s an issue
- that there must be a huge opportunity for new e-commerce plays that are limited only by our imagination, initiative and implementation….
Go start an e-commerce site today based in the region and you’ll quickly find that the main issue is not your will, building a site, incorporating (could be easier and cheaper), or the consumer. The biggest challenge is the difficulty in securing an inexpensive – globally-leading – payment gateway.
Let’s compare regions:
- link-out only gateways – no API usage to integrate payment into a seamless experience for the user
- choice of 2 gateway providers
- serve all Middle Eastern markets including Egypt and Lebanon
- ~$85,000 of collateral on account as a deposit with the merchant account provider (subtract from your operating capital)
- $1,000 setup fee
- $5,000 yearly maintenance fee
- 3% and 2aed on every transaction
North American provider:
- link-out or API gateways plus e-wallet services (can carry a balance on account to use later)
- choice of many gateway providers
- serve most all Middle Eastern markets, often not including Egypt and Lebanon
- $0 of collateral on account as a deposit with the merchant account provider
- $199 setup fee
- $420 yearly maintenance fee
- 2.6% and $0.25 on every transaction
You tell me which is easier for an entrepreneur to swallow at start-up? I understand that its difficult to setup internationally given the issues around residency and tax requirements, but this is an opportunity for making the local ecosystem more attractive for local and international entrepreneurs…
Oh can you imagine…..with a tax-free business climate, great central geography, access to existing and emerging markets, great weather, multicultural workforce, a fairly liquid environment…and combine that with a real interest in making it both easier to setup a start-up PLUS working with global payment gateways providers to maximize options for e-commerce start-ups and you end with even more reason to launch a tech start-up here.
What’s your experience as an online consumer or trying to enter the ecommerce space in the region?