Sunday, May 4, 2014

Retail professionals: unleash the potential of the Middle East’s eCommerce market

Fashion retailers are arriving in hoards to take advantage of the Middle East’s booming eCommerce market. As a retail-marketing manager and graduate student in Northwestern University’s IMC program I have learnt that success in this market calls for a deep understanding of regional shopping habits and have found two key research papers that identify the key factors that must be considered.

 In an eCommerce study commissioned by Visa Middle East, Edouard Dayan (Director General, UPU), Ayaz Maqbool (Managing Director and John Andrews (CEO, IORMA) highlight that the Middle East region is the fastest growing eCommerce market worldwide. Noting that this is still a very underdeveloped market the article discusses the opportunities and barriers to e-commerce adoption in the region. According to the study mobile shopping has a bigger role to play than PC based shopping with 29 percent of local users buying goods and services through smartphones, bucking the global trend of 26 percent.  The issue of trust in payment gateways was also highlighted as a major factor in adoption rates, which although improving, still poses an issue for local consumer, banks in the region are addressing this challenge through increased security measures for online payments. 

The value and growth potential of the Middle East retail market is further reinforced in a summary report by the European Travel Commission who predict the value of the eCommerce market to reach and estimated 15 billion by 2015.  The report provides profile of who is shopping online and how they are shopping. An important highlight of the article is the ranking of the top eCommerce sites  which places online giant Amazon only third, after local offerings and This ranking shows that although Middle Eastern consumers are warming up to the idea of eCommerce, they still prefer locally focused sites as opposed to regular international giants. The article also cites a key barrier of eCommerce site as online payment systems. 46% of Middle Eastern Internet users say lack of trust in payment options as a substantial barrier to engaging in eCommerce.  In line with this attitude is the finding that Cash on Delivery is still the preferred payment method when shopping online, which compared to western adoption rates might seem relatively primitive.

Taking into account the insights presented in these reports, I suggest the following 3 action items and e-tailer must take into account when considering the Middle East market:

  1. Localize your content. Arabicized e-commerce websites still perform better in the region then global giants such as E-bay and Amazon. Middle Eastern consumers are slowly adopting to  eCommerce but they need it on their terms. Brands that have defined the online landscape in other regions are not necessarily held in the same regard in this region. In order to gain the trust of the local consumer and help them on their eCommerce journey you must speak their language.

  1.  Your content must be mobile enabled. M-commerce in the Middle East is already surpassing global trends. Local consumers are not only used to this channel but are experts in it. While m-commerce is often an afterthought in  eCommerce strategy, when moving into this region is must be a fully functional component of your operations or you will be one step behind your target.

  1. Be flexible on payment gateways. Lack of trust in payment options is the biggest barrier to online business in the Middle East. Cash on delivery and prepaid cards, although seemingly primitive, remain the most common form of payment in the region. E-tailers must build credibility and trust by meeting the consumers on their terms before imposing their own procedures.
The Middle East e-commerce market is underdeveloped and one the fastest growing in the world, holding significant opportunities for both new and established players. Incorporating the above three insights into your strategy is a positive step forward in building a meaningful and valuable relationship with these consumers. Good luck!

Professional summary:

Ruthie Fischer is a retail marketing professional with 8 years experience developing and implementing a 360 communications strategy in competitive retail markets. Having spent 6 years working with some of the worlds leading luxury fashion brands and implementing their international marketing strategies in the UAE and GCC region, Ruthie is well versed in the complexities of the retail industry and consumer in the Middle East. Ruthie is currently undertaking a Masters of Science in Integrated Marketing Communications at Northwestern University’s Medill School. Contact Ruthie on @RuthieMFischer

1 comment:

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