Shopify E-commerce in the Middle East

by Julia Jackle - Jun 26, 2020

The Middle East is perhaps one of the fastest growing e-commerce hubs in the world. And though it is nowhere near the much-developed e-commerce markets of Europe and the United States, it presents a unique opportunity for international retailers who would like a share of its market. Undeniably, the region is experiencing tremendous growth. As a matter of fact, statistics indicate that sales volume are expected to quadruple from the 5b USD recorded in 2015 to over $20b by 2020. Other analysts are even prospecting that sales volume can potentially reach an unprecedented $48.8b by 2021. Currently, approximately 90 percent of the products being consumed in the Middle East are shipped from other countries, but this trend is expected to change. If this happens, an even bigger opportunity for e-commerce will be opened up.

What has led to this Market Boom?

A young Tech-savvy population

Countries in the Middle East boasts some of the youngest world populations– an essential driver for e-commerce. With over 108 million people, 28 percent of whom are between the ages of 15 to 29, there is a wide customer base for online e-commerce retailers. Besides, young people are the fastest growing demographic in the region. For instance, the average age in some countries is 22 years compared to 28 years which is a global average. This implies that the majority of people in this region are young. And with this generation being more technologically savvy, more so when it comes to the internet. This, plus the fact that the Middle East has one of the biggest per capital income and wealth in the world, the upward trajectory being recorded in E-commerce is prospected to remain on an upward trend.

Internet Penetration

Dispelling oriental stereotypes that the Middle East is all about deserts, statistics show that it is one of the regions with the highest internet penetration in the world. For instance, Egypt and Iran have appeared on top of world rankings in several occasions. In Dubai, 98 percent of the population was reported to be on the internet in 2017 ranking higher than France and the United States. These numbers are only representative of a few countries. All the same, they are astounding and offer an explanation of why the Middle East has become a hotspot for E-commerce.

The key players

United Arab Emirates

A Brief Overview

Perhaps, the UAE is the most talked about e-commerce opportunity in the Middle east and this is for a reason. It is one of the world’s most urbanized countries, has an impressive population of 9.3m people, an internet penetration rate of 85 percent, a large population of expats, and finally, one of the youngest populations not only in the region but also the entire world. One more thing, less than 30 percent of online shoppers are Arabs, a statistic that implies that there is a big number of foreigners buying items online.

Key stats:

  • Over 2m internet users and an e-commerce customer base of 6.8 million.
  • Biggest smartphone penetration in the whole world.
  • Shoppers under 31 years make 73 percent of all online transaction. They also represent over 64 percent of the entire population.
  • Revenue from e-commerce prospected to reach 20B USD by 2020.
  • 60 percent of all online buyers are in Dubai. This is significant considering there is a customer base of 6.8 million consumers.
  • The United Arab Emirates ranks 13th on the World Bank’s Logistics Performance Index 

 

Saudi Arabia – A Brief Overview

Undoubtedly the biggest and most attractive e-commerce hubs in the Middle East.

Saudi Arabia is also home to a very young and tech-savvy population with an average age of 26 years. The Saudi government has allegedly invested more than $100b in the development of infrastructure and logistics – an essential tool for e-commerce.

Key stats:

  • Over 75 percent of the demographic in Saudi Arabia is below the age of 35 years.
  • More than 60 percent of sales are between Jeddah and Riyadh, the country’s biggest cities. The other smaller towns and cities account for a small percent of e -commerce sales.
  • Home to 16m internet users 4 million of whom are already online buyers.
  • Largest per capital income and wealth in the Middle East.
  • E-commerce sales volume to grow by 12.53 percent until 2021.
  • E-commerce penetration to skyrocket from 50.57 percent to an impressive 71.92 percent by 2020.
  • The Saudi post has launched a National Addressing System across the entire country. All buildings have been issued with standardized addresses.  This will further smoothen logistics for online sellers.

 

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About the Author:
Julia Jackle
Julia is the co-founder and CEO of Creative971 and has written blogs in the past for the Entrepreneur Magazine UAE. Her extensive knowledge in the E-Commerce industry in the UAE and GCC is widely appreciated.

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