Brought to you by :Adveta Dwivedi

E-commerce Landscape in Middle East

• Overview of the growth of ecommerce industry in the middle east over the last 5 years

• The Status Quo • Ecommerce scenario on buying pattern and smartphone penetration. • Key Players - Names, website screenshots • Venture capital funds inflow • Customer insights - Key demographies, geographies, peak shopping seasons • Logisitics & Fulfillement - Issues with current setup & Suggested partners • Online payment processors - Suggested partners, integration options • Language options - English Vs Arabic • Digital Marketing options - SEO, SEM, sms marketing & social media. • Case Study.

• Quo Vadis - What does the future hold? • Key Challenges • Positive Signs • Winds of Change • Entry of global giants

AGENDA

Status Quo

12.811.29.07.0

E-Commerce Sales Growth

The PayPal Insights: e-commerce in the Middle East report conducted in conjunction with Ipsos shows that the Middle East’s online commerce market grew 29% from $7 billion in 2011 to $9 billion in 2012.

bn$

2011 2012 2013 2014

15.0

2015

bn$ bn$ bn$bn$

*SOURCE : PayPal Insights: e-commerce in the Middle East report

In 2012, there were over 30 million people shopping online in the Middle East, an increase of 20% from 2011. Given that there were over 110 million internet users in 2012 (and over 120 million in 2013), almost 30% of these internet users are now active buyers online

11095

Mn

2011 201225 30

Mn

Internet usersOnline Shoppers

Active Online Users

$

Internet Users & Online Sales Growth

$9 billion in 2012There are 110 million internet users in the Middle East and North Africa, of which 30 million are shopping online already. PayPal estimates a total population of 350 million.

$15 billion by 2015

X2

*SOURCE : PayPal Insights: e-commerce in the Middle East report

Mobile E-Commerce

The number is as high as 60% in the United Arab

Emirates and Saudi Arabia.

X6

$

$500 million on mobile in 2012.

$3 billion paid for on mobile by 2015

*SOURCE : PayPal Insights: e-commerce in the Middle East report

Nearly half (47%) of the Middle East population

uses smartphones

$248$250$1521

$222

Things People intend to buy Online

!ANNUAL SPENDING(USD)

COMPUTER

TRAVEL

CONSUMER ELECTRONICS

JEWELERY/WATCHES

CAR PARTS/SPORTS

HOUSEHOLD

FOOD N DRINKS

$192

FASHION

$133

$108 $107

$176

*SOURCE : PayPal Insights: e-commerce in the Middle East report

20% of UAE online shoppers go to Souq.com. 10% of Egyptian and 13% of KSA e-consumers also visit the site respectively.

eCommerce penetration in the region

Egypt

Lebanon

Saudi Arabia Kuwait

UAEUAE

Saudi Arabia

Lebanon

Egypt

Kuwait

46%

25%

9%

8%

35%

J.P. Morgan Chase and Blakeney Management have invested over $20 million in Dubai-based ecommerce firm Namshi.com - Reuters is reporting

Jabbar Internet Group, Naspers($75 mn) and Tiger group invested in souq.com. In total, Souq has raised $150 million to date

*SOURCE : Trade Arabia

• Jordan-based MarkaVIP.com, a discount sales website, has received funding from international investors Antwerp-based Hummingbird Ventures and San Francisco-based Lumia Capital. Tiger has also invested in Dubai-based businesses Triperna.com and cobone.com.

Venture Capitalists Inflow

Online consumer

• According to recent research from Ipsos ,Online shoppers in the Arab world are more likely to come from the over 35 age group, with 53% of that group saying they bought online occasionally.

• The 26-35 age group follow closely behind with 52% saying they bought online occasionally.

• Men are more likely than women to shop online in the Middle East, with 46% of males compared to 32% of females shopping online.

*Source IPSOS 2013

*SOURCE : Trade Arabia

• Online spending frequency and sales have a large upward shift amongst Middle Eastern consumers during Ramadan. !

• In the U.A.E.,For example, the eCommerce market had a 40 percent increase in sales during the Holy Month in 2012 !

• Internet use in Saudi Arabia was reported to peak between 3am and 6am during Ramadan.

Peak Shopping Season

NO recognized law, only hand carried regulations

Companies can only send consolidated freights by road and not by air

Aramex has worked very closely with e-commerce providers such as Souq.com and, more recently, Namshi to optimize the inventory and delivery logistics.

Customs costs remain prohibitively expensive

Logistics

6080

155

Payment methods for e-commerce

In Qatar, 7% of online shoppers use PayPal to complete their transactions. Credit cards are used in 18% of the cases, and COD is used for the remainder, 75% of the time

% %

2012 2015

15 25Cash on DeliveryPayment CardsPaypal

About 80% of online purchases in the Middle East are made with cash on delivery. Credit and debit cards

make up 15%, and payment gateways the remainder.

Language(لغة) English/االعرربيیة• Arabic is the language of the

region. • Important to have bilingual

website - English and Arabic. • 80% of the Google searches in

Saudi Arabia are done in arabic. • Invest in arabic websites and

concentration on arabic websites, search engines in digital space.

• Google(95%), yahoo maktoob and bing are the popular search engines.

Access to Online Marketplace

USER MARKETPLACED

IRECT

SITES/SOCIAL

MED

IA/EMAIL

SEARCH

DIGITAL MEDIA• The total digital advertising spend in the Arab region in 2011 was only

USD 175 million, representing 4% of the total ad spend in the region. Deloitte predicts that digital ad spend will grow at a CAGR of 35% in the region over the period from 2011 to 2015 reaching approximately 10% of the total advertising spend by 2015.

• Branded apps are a key growth area, however, SMS messaging remains the most popular and most ‘effective’ medium of mobile marketing, particularly in emerging markets such as the Middle East from a return on investment perspective.

• There is a strong unmet demand for Arabic content with wide variations across markets. In the UAE, at least 40% of respondents would prefer to browse in Arabic, while in the KSA, 99% of respondents prefer to browse in Arabic.

• Advertising effectiveness is measured by a range of metrics standard across most advertising formats, such as cost per thousand impressions (CPM) and, for online advertising, click through rates (CTRs).

Algeria – www.google.dz !Bahrain – www.bahrain.com !Egypt – www.google.com.eg !Iraq – Google.com.iq !Kuwait – www.google.com.kw !Lebanon – www.google.com.lb !Libya – www.google.com.ly !Morocco – www.google.co.ma !Oman – www.google.com.om !Palestine – www.google.ps !Qatar – www.google.com.qa !Saudi Arabia – www.google.com.sa !Syria – N/A !Tunisia – www.google.tn !United Arab Emirates – www.google.ae !Yemen – N/A

SOCIAL MEDIA

An average UAE internet user is a fan of 43 pages on Facebook

Facebook engagement in the Middle East increases 30% during Ramadan.

Facebook ads in Egypt are now as popular as Google ads

More than 70% of active users access Facebook from a mobile device

The MENA region contributes around 2 hours out of 72 hours of video uploaded every minute on YouTube!

• About 23 million visitants to the website every month, potentially expected to increase even more

• Over 6 million registered users who actively use the domain for purchase

• Over 4,00,000 products featured as a part of the overall product catalogue across 15 major categories

• As per Naspers’ report, the website is currently valued at about US$ 500 million

• Employee count of about 1,000 personnel

Naspers report

Case Study : s

PARTNERS

Quo Vadis

Challenges of E-commerce

No street addresses for residential or business locations within the city, only P.O. boxes

The Gulf region is also highly susceptible to online cyber attacks. A study by Norton from Symantec reported that two-in-five mobile shoppers in the MENA region have become a victim of cybercrime.

Only 6 percent of Internet users regularly shop online, and almost half (43 percent) of users said they do not purchase online because they don’t trust the region’s online payments process.

Logistics across borders.Customs costs remain prohibitively expensive, with additional fees frequently making the purchase of goods from overseas uneconomical – negatively impacting both suppliers and consumers

Absence of the relevant e-laws necessary to provide proper levels of protection for consumers and vendors.

USA 307bn 353bn

Europe 353bn 390bn

Asia Pacific 220bn 278bn

Latin America 43bn 54bn

MENA 10bn 15bn

World 960bn 1120bn

2012 UP2011index=

B2C e-commerce and the growth rates per region (in US$)

15%20%35%30%45%20%

LAND OF OPPORTUNITY

Expected to be a $15bn market by 2015.Nearly half of the region is on smartphones.

Paypal, google and aramex to invest in the market.

VC funding companies investing in ideas.

• Despite the entry of global players like Amazon and eBay in some of the Arab nations, the online marketplace in the region is dominated by local retailers, led by Souq.com.

• Local retailers not only offer consumers the opportunity to buy global brands and products, but also have a better understanding of the cultural and language requirements of the Arabs as opposed to multinationals like Amazon and eBay.

• Still a belief the market will consolidate in the years to come and the large global online retailers

will acquire fast growing local players to help increase their market share.

Entry of Global Giants

NEW INITIATIVEGoogle, PayPal, ShopGo and Aramex recently announced the launch of a new initiative to empower retailers to head online in MENA for the first time. !

The idea is that the platform, called EZStore, will act as a hub or one-stop-shop for businesses wanting to go digital, enabling them to enjoy a three-way funnel process: promoting their online shops with Google, managing payments with PayPal and shipping merchandise though Aramex.

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Sources 1. http://tfour.me/2013/09/e-commerce-trends-in-the-middle-east-on-mobile-and-desktop-

a-study-by-paypal/ 2. http://blog.infinitemonkeys.mobi/smartphone-usage-in-the-middle-east-statistics-and-

trends-infographic/ 3. http://www.pymnts.com/uncategorized/2013/overcoming-ecommerce-challenges-in-the-

middle-east/#.U2De7q2SzkU 4. http://etc-digital.org/digital-trends/ecommerce/ecommerce-insights/regional-overview/

middle-east/ 5. http://www.slideshare.net/IpsosMENA/ipsos-arab-net-presentation-beirut-2013 6. http://www.symantec.com/connect/blogs/e-commerce-middle-east-and 7. http://www.albawaba.com/business/online-shopping-middle-east--564947 8. http://gulfnews.com/business/retail/e-commerce-in-the-uae-valued-at-10b-

by-2018-1.1297490 https://www.paypal.es/mobile-insights/pdf/PayPal-Insights-E-commerce-MiddleEast-2012-2015.pdf http://www.pymnts.com/uncategorized/2013/ramadan-causes-online-shopping-to-increase/#.U2FTPq2SzkU

9. http://www.slideshare.net/waelHainy/souqcom-presentation-standardahfinal3 10.http://www.deloitte.com/view/en_BH/bh/insights/

fb67759e1cc6d310VgnVCM2000003356f70aRCRD.htm 11.http://blogs.wsj.com/digits/2014/03/24/souq-com-dubai-based-e-commerce-site-

raises-75-mln/ !

SHUKRAN