World Economy

Arab World e-Commerce to Nearly Double to $13b

Arab World e-Commerce to Nearly Double to $13b
Arab World e-Commerce to Nearly Double to $13b

The regional online market for electronics, clothes and white goods, which generated $7 billion in 2014, is expected to nearly double in the next five years, growing in size to $13.4 billion by 2020, a report said.

Events and entertainment will generate $75 million more than the $125 million generated in 2014, creating over $200 million annually for the region by 2020, added the “State of Payments in the Arab World” released by Payfort, a leading online payment gateway and payment solutions provider in the Arab World, TradeArabia reported.

“By getting the opinions of hundreds of merchants who interact with consumers on a day-to-day basis, we have created a report is full of consumer-centric data that will help you understand market behavior in payments and e-commerce,” said Omar Soudodi, managing director of Payfort.

The second section of the report focuses on entertainment and events, marketplace services, and e-commerce in general, including vital data on acceptance rates, chargeback ratios, the volume and size of current transactions, and demographics.

Outside of the larger e-commerce markets, Payfort also examined smaller e-commerce sectors including classifieds, listings, services and other non-physical products sold online, dubbed “Marketplace Services.”

In surveying more than four thousand of online buyers across the UAE, Saudi Arabia, Egypt, Jordan, Lebanon and Kuwait, Payfort gathered significant insights on the demographics of customers who utilize ecommerce, said Soudodi.

Payfort found that e-commerce is generally dominated by Saudi Arabia and Egypt – the two largest population centers in the Arab world. Coming close behind these two countries is the UAE with its strong rate of internet penetration.

 Men Buy More

Payfort anticipates that these three major markets will continue to drive change in the world of Arab e-commerce. While Egypt has the largest number of online buyers, the UAE and Kuwait have higher proportions of e-commerce customers per capita.

Social networks play an increasing role in e-commerce, though no one network dominates the entire region. While Facebook rules Egypt and the UAE, Instagram and Twitter dominate Saudi Arabia. Surprisingly, Payfort found that Lebanon relies heavily on the professional network LinkedIn.

Payfort determined that with the exception of the UAE, men typically buy much more than women online across the region. Payfort recommends that Arab governments place more focus on bringing e-commerce to their populations.

 Easy Installment

Unsurprisingly, people aged 26-35 are the largest population who utilize e-commerce. However, what customers tend to buy online varies significantly by country. Unlike other regions where credit or debit cards are an essential part of e-commerce, the Arab world continues to prefer cash on delivery.

This trend is particularly prevalent in Egypt, where 72 percent of consumers use cash for their e-commerce activity. Easy installment payment plans are also a popular payment method in the region, with 56 percent of online travel agents (OTAs) claiming them to be an integral part of their business.

Payfort found that acceptance ratios for e-commerce companies remain low as many start-ups begin without fully developed checkout pages. The largest challenges for online payments come from reliance on cash on delivery as a payment system, and high chargeback ratios.

The final half of Payfort’s “State of Payments in the Arab World” will be released at the two-day E-Commerce Show Middle East 2015, which opens today (May 12) in Dubai, UAE.