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Regional e-commerce firms set sights on Saudi Arabia
Published in The Saudi Gazette on 19 - 11 - 2012

JEDDAH — International investors are setting their sights on the Middle East's young but booming e-commerce industry, and particularly on the promising opportunity in the Saudi Arabian market.
Saudi Arabia is the top destination for these e-commerce businesses. It ranks second in e-commerce sales in the GCC, and more importantly represents the biggest retail sector in the region, with the promise of huge growth in e-commerce in the near future.
The challenges and opportunities of building an e-commerce business in Saudi Arabia is one of the central topics that will be explored in depth at ArabNet Riyadh, the largest gathering of digital executives and entrepreneurs in the Kingdom that will be held on Nov. 20-21 at the Four Seasons Hotel. The conference will discuss the boom in Arabic digital content in Saudi Arabia.
Digital expert Omar Christidis, founder of ArabNet, the hub for Arab digital professionals and entrepreneurs, said that Saudi Arabia is currently the largest digital market in the MENA region – with almost 40 percent of all Arabic tweets, half of Wikipedia's Arabic content and 35 percent of all Arabic content on the web coming from Saudi Arabia.
Furthermore, more than 70 percent of Internet users in Saudi Arabia conduct their searches in Arabic, and almost 60 percent of the Kingdom's users access Facebook through Arabic accounts. Additionally, Saudi Arabia has one of the highest mobile penetration rates in the world.
He said spite of the fact that Arabic is the 7th most popular language on the Web, Arabic content on the web is no more that 2 percent globally. “We are seeing increasing initiatives to create Arabic content, especially in Saudi Arabia. Arabic online video is one of the hot sectors in Saudi Arabia, which has the highest per capita daily consumption of YouTube in the world.”
The forum will bring together more than 50 expert speakers and 600 attendees, and is hosted by the Badir Program for Technology Incubators, part of the King Abdulaziz City for Science and Technology, and supported by the Communications and Information Technology Commission of Saudi Arabia.
“Being able to capture the Saudi Arabian market is a critical success factor for e-commerce ventures in the Arab region,“ said Hassan Mikail, Regional Manager for e-Commerce at Aramex, which is the e-commerce Partner for ArabNet Riyadh. “All eyes are on Riyadh, where the next phase of rapid growth will be in this sector.”
Some of the main challenges facing e-commerce businesses in Saudi Arabia and the region more broadly are payment and logistics. More than 70 percent of online buyers in the region choose cash on delivery as their preferred mode of payment, straining the cash flow of e-commerce startups. Cash on delivery purchases are 7 times more likely to be returned, according to Aramex, and this puts e-commerce companies at the risk of incurring extra shipping costs as well.
Paypal's recent entrance to the market could help alleviate some of these issues and stimulate rapid growth in the sector.
Paypal announced the launch of it's Middle East operations last Nov.14, and three of the Middle East's largest online retailers, Namshi, Souq.com and MarkaVIP have all raised rounds of funding this year for major expansion.
Elias Ghanem, PayPal's new managing director for Middle East and North Africa, said: “PayPal has big ambitions to help millions of internet users to shop conveniently and safely online within the MENA region.”
Beyond online retail, there are also tremendous opportunities for companies that can help existing offline businesses transition to the digital realm.
Over 85 percent of businesses in the GCC have no online presence according to Google; these businesses are losing out on the 66 percent of MENA Internet users who use the web to search for products and services.
Companies like Jeeran, a business reviews site, and Fursaty, a group-buying site, are stepping in to fill the gap and providing merchants with their first glimpse of the benefits of going online and raising consumer awareness, further driving e-commerce in the region. Jeeran and Fursaty will be discussing the ways in which they are doing this at ArabNet Riyadh.
E-commerce markets in the MENA are evolving and the online customer base is rapidly expanding.
Hosam Arab, co-founder and managing director of Namshi.com, said “the Middle East region is finally ripe for e-commerce as governments ease restrictions on regional trade, logistics providers scramble to improve their services to e-commerce retailers and their customers, and investment funds pour into the sector after the emergence of a number of exciting regional success stories.” — SG


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