The Middle East is a blue ocean market in the eyes of e-commerce companies in recent years. Affected by the geographical environment, the development of light industry in the Middle East is limited, and there is little production of consumer goods. Due to the lack of products, people in the Middle East are very dependent on imported products, and the market demand is huge. The predecessor of Amazon Middle East Station was SOUQ, which is the largest e-commerce market in the Middle East.
The Middle East is a blue ocean market in the eyes of e-commerce companies in recent years. In March 2017, Amazon acquired the e-commerce SOUQ at a valuation of US$650 million, becoming Amazon’s Middle East website, with Amazon’s technology and global resources, while maintaining its unique brand operation.
1. Why is the Middle East market a cross-border e-commerce blue ocean market?
The tax rate in the Middle East is low, 15% in Saudi Arabia and 5% in the UAE, with a high consumption level and high product profits. Not only that, 360 million people indicate huge room for development, and 88% of the Internet coverage gives sellers more confidence;
On the other hand, the e-commerce market in the Middle East is developing rapidly, and the e-commerce platform is also young, flexible in operation, and has many supporting preferential policies. In addition, there are relatively few e-commerce companies at present, and the competition is relatively small, which has attracted the attention of many cross-border e-commerce sellers;
Compared with the mature European and American markets, the Middle East e-commerce market has just started: market reports show that the total e-commerce market in 2021 is US$4.15 billion, and it will reach US$4.9 billion in 2022. It is enough to see the strong potential of this market.
Second, the advantages of the Middle East market.
1. The Middle East is rich and the market demand is large.
Due to the development of the oil industry, the per capita GDP of the UAE and Saudi Arabia is as high as US$40,000 and US$20,000 respectively. Affected by the geographical environment, the development of light industry in the Middle East is limited, and the production of consumer goods is small. Due to the lack of products, the people of the Middle East are very dependent on imported products, and the market demand is huge.
2. Geographical limitations.
The geographical environment has promoted the development of e-commerce in the Middle East. The high temperature and strong winds in the Middle East can only choose shopping malls with limited goods. In addition, affected by local cultural factors, it is not convenient for women to go out shopping. Therefore, e-commerce has become an important channel for shopping.
3. The degree of digitalization is high.
The degree of digitalization in the Middle East continues to increase, and the penetration rate of smartphones in the Middle East is high and still showing an increasing trend year by year. Taking Saudi Arabia as an example, the penetration rate of smartphones has reached 96%, laying a solid foundation for the booming e-commerce market.
4. Good policy benefits.
In recent years, the Middle Eastern governments have sought to support economic development through investment and legislative reforms. For example, they have invested heavily in world-class events such as the 2022 Qatar World Cup. In order to reduce the national economy’s dependence on oil, as well as the Digital Oman Strategy and the Dubai Commercial City Plan, these policies will greatly promote the transformation of the Middle East’s economic growth to a digital economy and provide good development opportunities for e-commerce in the Middle East.
3. Advantages of Amazon Middle East.
(1) The country is wealthy, has strong purchasing power and huge potential.
(2) The Internet penetration rate is as high as 88%, and the development of e-commerce is unimpeded.
(3) The predecessor of Amazon Middle East was SOUQ, which is the largest e-commerce market in the Middle East.
(4) There are many holidays and many traffic peaks in a year.
4. Hot-selling categories of Amazon Middle East.
Fashion, electronics, sports and home furnishings are popular categories in the Middle East e-commerce.
Due to low VAT, low logistics costs, low FBA costs, and slightly higher product pricing than other websites, the profit margin of the Middle East site is higher than other websites. The profit margin of European and American websites is about 20%, but the profit margin of Middle Eastern websites can basically reach more than 40%.
Such beautiful data has prevented many Chinese sellers from entering the market because there is no local platform for Chinese sellers to play, especially Saudi Arabian websites, which require an invitation from Amazon to open a store. I hope the above content is helpful to you.