International investors are setting their sights on the Middle East’s young but booming e-
commerce industry, and particularly on the promising opportunity in the Saudi Arabian market.
Paypal announced the launch of it’s Middle East operations on November 14th, and three of the
Middle East’s largest online retailers, Namshi, Souq.com and MarkaVIP have all raised rounds of
funding this year for major expansion:Namshi, a UAE-based online retailer focusing on fashion
and footwear, has secured 20 million dollars from JP Morgan Chase and Blakeney Management;
Marka VIP, the Middle East’s largest flash sales site focusing on luxury goods, raised 10 million
from multiple international venture capital firms; and Souq.com, the region’s largest online
retailer with a customer base of 8 million, secured $45 million end of last monthfrom Naspers, a
South African media company, and Tiger Global, a New York hedge fund.
Saudi Arabia is the top destination for these e-commerce businesses: it ranks second in e-
commerce sales in the GCC, and more importantly represents the biggest retail sector in the
region, with the promise of huge growth in e-commerce in the near future. The challenges and
opportunities of building an e-commerce business in Saudi Arabia is one of the central topics
that will be explored in depth at ArabNet Riyadh, the largest gathering of digital executives
and entrepreneurs in the KSA, taking place on November 20-21 at the Four Seasons Hotel. The
forum will bring together more than 50 expert speakers and 600 attendees, and is hosted by
the Badir Program for Technology Incubators, part of the King Abdulaziz City for Science and
Technology, and supported by the Communications and Information Technology Commission
of Saudi Arabia. “Being able to capture the Saudi Arabian market is a critical success factor
for e-commerce ventures in the Arab region,“ stated Hassan Mikail, Regional Manager for E-
Commerce at Aramex, which is the E-commerce Partner for ArabNet Riyadh. “All eyes are on
Riyadh, where the next phase of rapid growth will be in this sector.”
Some of the main challenges facing e-commerce businesses in Saudi Arabia and the region more
broadly are payment and logistics. More than 70% of online buyers in the region choose cash on
delivery as their preferred mode of payment, straining the cash flow of e-commerce startups.
Cash on delivery purchases are 7 times more likely to be returned, according to Aramex, and this
puts e-commerce companies at the risk of incurring extra shipping costs as well. Paypal’s recent
entrance to the market could help alleviate some of these issues and stimulate rapid growth
in the sector. Elias Ghanem, PayPals new Managing Director for Middle East and North Africa
commented: “PayPal has big ambitions to help millions of internet users to shop conveniently
and safely online within the MENA region.”
Beyond online retail, there are also tremendous opportunities for companies that can help
existing offline businesses transition to the digital realm. Over 85% of businesses in the GCC
have no online presence according to Google; these businesses are losing out on the 66% of
MENA Internet users who use the web to search for products and services. Companies like
Jeeran, a business reviews site, and Fursaty, a group-buying site, are stepping in to fill the gap
and providing merchants with their first glimpse of the benefits of going online and raising
consumer awareness, further driving e-commerce in the region. Jeeran and Fursaty will be
discussing the ways in which they are doing this at ArabNet Riyadh.
E-commerce markets in the MENA are evolving and the online customer base is rapidly
expanding. Hosam Arab, Co-Founder and Managing Director of Namshi.com declared, "The
Middle East region is finally ripe for e-commerce as governments ease restrictions on regional
trade, logistics providers scramble to improve their services to e-commerce retailers and their
customers, and investment funds pour into the sector after the emergence of a number of
exciting regional success stories."
To register for ArabNet Riyadh, visit www.arabnet.me.
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