With increasing internet penetration, wealth, innovation, and emerging technologies, the Middle East eCommerce market is growing exponentially. Experts have forecasted that it is expected to grow by 30% every year for the next 2 years. In just a few years, it is anticipated to double in size.
There is significant potential for investors, online retailers, marketers, and innovators. Thus, it is imperative that you understand the intricacies of eCommerce in the Middle East.
Booming eCommerce businesses in the Middle East:
Consumer behaviour in the Middle East:
According to PwC’s Total Retail Survey, 36% of those who are aged between 18 and 24 shop online, at least once a month, when compared to only 13% of those who are aged 55 and above.
Why are they buying online?
How are they buying online?
What are the Challenges for eCommerce businesses in the Middle East?
Low Credit Card Penetration
According to a recent report by Payfort’s State of Payments, credit card penetration in the Middle East countries varies from 15% in Lebanon, less than 45% in Qatar and Saudi Arabia, to 97% in Kuwait.
To combat this problem, the eCommerce key players in the region like Souq.com have localized payment options which include cash on delivery (COD) and prepaid cards.
Lack of Support for Localization of Arabic Language
Lack of support for localization of Arabic language (read from right to left) is a major factor that creates hindrance for companies to launch an online presence in the Middle East. Therefore, choosing an eCommerce platform that fully supports right to left languages like Arabic is a must. This will help you tap prospective Arabic customers by eliminating all language barriers.
Lack of a structured logistics and delivery system
Many of the cities in the Middle East do not have a proper home delivery postal system. The delivery personnel find it extremely difficult to navigate and reach the correct location. This means there are no street addresses for residential or business locations in the town. Delivery drivers in most cities must be familiar with the city’s layouts since locals commonly provide buildings and landmarks as a means of navigation. This creates a challenge for automating the delivery process and disrupts the process of order delivery planning and scheduling.
Susceptible to cybercrime
The eCommerce market in the Middle East Gulf is highly vulnerable to online cyber-attacks. According to a report by Symantec, 40% of mobile shoppers in the region have become a victim of cybercrime and 71% of the respondents have faced cyber-attacks.
Lack of confidence in online payment security
A serious lack of confidence is seen amongst consumers and merchants while opting for online payments. According to Biz Report, merely 6% of internet users in the Middle East regularly shop online while 43% of users refuse to purchase online as they do not trust the region’s online payments process.
Credit card data theft is very common in this region. No wonder, customers are reluctant to use credit cards for online transactions. As a result, online retailers are implementing secure payment methods and educating customers about the security measures.
Legal policies for carrying out eCommerce in the Middle East
In the Middle East, the Electronic Transactions and E-Commerce Law (Federal Law No 1 of 2006) generally allows the execution of contracts between two parties through electronic means, and states that the consent and acceptance of such contracts may be expressed through electronic communications.
The risk of contracting in this manner is that the customer has scope to dispute that any agreement ever occurred. You have to take essential steps to make sure that there is very little scope for any dispute as to whether or not the terms and conditions of the contract have been accepted by the customer.
Being an online store owner, you would be collecting and using personal customer data. Therefore, it would be essential for you to consider that the collection and particularly the use of the personal customer data is in accordance with applicable law.
There are strict laws that prohibit the use or disclosure of ‘secret’ information without the consent of the person to whom the secret relates. Thus, you have to make sure that the customer’s personal information is submitted by this ‘consent’ via an electronic contract between the user and the owner of the site.
Whether the website content is owned by the owner of the website, or licensed to the website owner by a third party, the website owner has to ensure that it has the required right to display the content on their online store, and also regulate how users of the eStore use such content. This can be best achieved via the website terms and conditions existing in the Middle East.
For eCommerce businesses, it is necessary to carefully consider the terms of agreements with online payment gateway providers, and particularly make sure that the gateway providers offer adequate assurances that the transactions facilitated by their respective systems will be completed successfully.
Key considerations for companies who are planning to set up an eCommerce business in the Middle East:
- Secure online payments and data protection.
- Explore the trust-gap for customers and formulate solutions to build confidence in them and urge them to participate.
- Innovate and support pleasant consumer experiences by developing local language terms and conditions, user interfaces that are easy to comprehend, and complaint handling systems that are responsive.
- Improve logistics and delivery system by implementing real-time tracking, dynamic route optimization, and delivery through autonomous vehicles such as drones and electric vehicles.
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