The Middle East e-commerce market has huge potential, and localization is the key
The Middle East includes 25 countries including Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), Yemen, Palestine, Cyprus and Turkey. and region. The population in 2020 is 430 million people, and the Internet usage rate is quite high. Bahrain’s Internet usage rate reaches 99%, and the UAE’s Internet penetration rate is as high as 100%, ranking first in the world. The e-commerce market in the Middle East has achieved rapid growth in the past five years, growing from US$4.2 billion in 2015 to US$22 billion at the end of 2020, and to US$50 billion in 2022.
The consumer market has huge potential
The consumer market potential in the Middle East is huge, not only from consumers in economically developed countries, but also because it has a large number of young consumer groups who are keen on online shopping. The Middle East has a population of approximately 490 million, a large consumer base, and the population is generally younger. Taking Saudi Arabia as an example, people under the age of 35 account for 75% of the total population. Therefore, Internet acceptance is relatively high. The Middle East is rich in oil resources, has significant wealth, and has strong purchasing power among the people. According to data released by the World Bank, in 2017, the per capita GDP of many countries in the Middle East, including Qatar, Israel, Kuwait, the United Arab Emirates, Saudi Arabia, and Oman, ranked among the top 50 in the world. The younger generation relies on the Internet and smartphones, and the growth of e-commerce is completely expected.
The layout of Chinese enterprises
Chinese companies are accelerating their entry into the Middle East market and seizing this huge business opportunity. Take the consumer electronics brand “Anker Innovation” as an example. Its revenue in the Middle East market continues to grow, especially the sales performance of high-end products on Amazon. Another young technology brand, TYMO, has also quickly emerged as the leading brand in the hair straightening comb category in the Middle East.
Competition and opportunities of cross-border e-commerce platforms
Amazon has become one of the most mature cross-border e-commerce companies in the Middle East through its acquisition of Souq, and Temu, a new player focusing on the lower-tier market, is also making an impact in the Middle East market. In addition, Noon, the UAE’s local e-commerce platform, is also growing and becoming one of the largest local e-commerce companies in the Middle East. Competition among these cross-border e-commerce platforms has provided Chinese companies with more opportunities and choices.
Logistics and localization challenges
There are many difficulties in logistics in the Middle East. First, logistics infrastructure varies greatly among countries. Affected by the turmoil, postal development is relatively lagging behind. Second, addresses are not standardized. Address databases are poorly maintained in the Middle East. Consumers’ online shopping habits lead them to write a post office box number on their delivery address, which makes it difficult to deliver products to an ambiguous delivery address. Third, users prefer cash on delivery, so logistics also assumes the collection function. Buyers do not need to pay after placing an order when shopping online, but they are prone to regret and rejection. Despite these challenges, dedicated logistics lines are also prevalent.
Advantage categories and development trends
Since light industrial products in the Middle East mainly rely on imports, advantageous categories of Chinese sellers such as clothing and bags, consumer electronics, and furniture supplies are very popular in the region. Fashion, consumer electronics, and home life are the three most popular categories in the Middle East. Due to low VAT, low logistics costs, low FBA costs, product pricing is slightly higher than other websites, the profit margin of the Middle East station is higher than other websites.
Conclusion
As a new blue ocean for cross-border e-commerce, the Middle East market is attracting the attention of global companies. As the Middle East consumer market continues to upgrade and competition among cross-border e-commerce platforms intensifies, the development prospects of the Middle East market are exciting.
Reference materials:
Characteristics of e-commerce in the Middle East market
The potential and opportunities of overseas e-commerce markets in the Middle East
What are the advantages of the Middle East market?
Logistics conditions in the Middle East and other markets
The potential of the Middle East e-commerce market
Middle East cross-border e-commerce