With high average household incomes and young tech-savvy populations, GCC (Gulf Cooperation Council) countries are primed for e-commerce and demand is growing
E-commerce skyrocketed in 2020 when the pandemic caused a seismic shift in consumer spending habits. Shoppers around the world turned to their smart devices for everything from groceries to clothing. Two years later, despite getting Covid-19 under control, the e-commerce trend is continuing to gain momentum.
According to data published by leading e-commerce company Shopify, global online retail sales will total €5.33 trillion in 2022. More than 15% of all retail sales in developed markets are currently made online, and growth is expected to reach 24.5% by 2025.
Currently, in the Middle East, e-commerce accounts for only around 2% of the market, representing an opportunity for rapid growth that's enticing to start-ups.
Dubai CommerCity is an all-in-one e-commerce hub for new and existing businesses. Senior Director of Marketing, Rashed Al Mulla, says the demand for e-commerce outstrips the current supply.
"The whole industry is just trying to catch up to this demand," explains Al Mulla. "The demand is coming from both ways; it's coming from the people demanding their goods and services be delivered via e-commerce and from suppliers who've identified that this is an opportunity that we need to tap into. And all the sub-services are now in high demand, like fintech, payment gateways, online portals, last-minute delivery and logistics."
One of the companies benefiting from the e-commerce trend is Tamara. The Dubai-based fintech firm specialises in designing buy now, pay later financial solutions for consumers in the UAE, Kuwait and Saudi Arabia. Within 20 months of operating, the platform has amassed more than 2.5 million registered customers and more than 3,500 registered merchants.
Tamara co-founder and COO, Turki Bin Zarah feels the GCC (Gulf Cooperation Council) region is still ripe for further growth as the "big shift from bricks and mortar to e-commerce" continues.
"One of the reasons we see growth happening is the population is actually a very young population. They're also very tech-savvy and focused on convenience," says Bin Zarah, "and when you look at general stats like median household income, it's very compatible with developed markets, so there's a big opportunity in this region."
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