While the MENA region has been quite behind when it came to e-commerce in comparison with the rest of the world, it has covered significant ground in the past two years since the advent of the COVID-19 pandemic. While still not on par with the efficiency and mass adoption exhibited within the e-commerce sectors of countries like the US, China or the UK, regions like the GCC are still recording notable growth.
The MEASA region’s e-commerce market is expected to be valued at $148.5 billion by the end of 2022, a 2021 Dubai CommerCity report recently revealed, noting a staggering CAGR of 18.4%, over the 2019-22 forecasted period. Additionally, the Gulf region witnessed a 214% year-on-year increase in cross-border online sales by mid-year 2020.
On the consumer level in a country like the UAE, a recent Checkout.com report had revealed that nearly 83% of local residents would maintain or even increase their current level of e-commerce spending into 2022, signalling further growth moving forward.
Innovation feeds growth, which feeds further innovation, so what are the resulting trends shaping the e-commerce market in the region today?
As we’ve previously noted in regards to the travel and tourism sector, personalisation is quickly rising up the agenda for many tech-oriented sectors, and B2C e-commerce is no different.
Thanks to advancements in technology and AI, businesses are able to implement smart and adaptive algorithms that can tailor recommendations, landing pages, and “Related Products” carousels, as well as change the order of filter options, highlighting a preferred payment method, and more.
A cookie-cutter user experience will no longer cut it, and it’s the e-tail businesses that acknowledge this that will rise above the rest.
Online payment and digital wallets
Long gone are the days when cash reigned supreme. Scepticism surrounding online payments has been mostly eroded by need and convenience, thanks in large part to the pandemic forcing people home, in addition to social distancing concerns.
A 2022 survey by Checkout.com discovered that over half of the UAE population is using digital wallets for the first time, favoured primarily by the younger portion of the population.
As an online retailer, it is in your best interest to incorporate as many online payment options as possible into your online platform, to permit the largest number of potential customers to have the ability to make a purchase.
While they are buzzwords that marketers love to throw around, augmented reality (AR) and virtual reality (VR) are legitimate tools that can elevate the online buyer experience if done right and not simply tacked on as a gimmick.
The convenience offered by online shopping is unrivalled, sure, but sometimes, you just want to get a closer look at that pair of sneakers, or you might want to visualise how a certain couch or picture frame would blend in with your living room decor. Well, thanks to VR, you are able to inspect said sneakers up close, rotating and zooming a digital model of said product in virtual space, while AR will let you test out that frame on your living room wall using your phone camera. Some brands might even let you try on shoes or clothes with the help of AR.
Buy Now, Pay Later
Buy Now, Pay Later (BNPL) payment options truly took the MENA region by storm ever since their debut here. An alternative to traditional instalment plans and restrictive, pricey bank credit options, consumers found respite in a transparent, well-defined instalment loan often divided into four payments with zero interest fees. This drive has manifested in notable BNPL penetration numbers in MENA, on par with and, in some cases, surpassing UK and European figures.
The increased confidence in online payments, digital wallets and e-commerce, in general, is only serving to bolster the importance of BNPL as a veritable mainstay of the market, and an option that retailers need to make available for their customers as soon as possible.
Arjun Singh, Head of Financial Services - MENA at management consulting firm Arthur D. Little, even went as far as saying he is confident that 2022 will be the year of BNPL in MENAP in a recent interview with Checkout.com.
Quick commerce, often shortened to Q-commerce, entails delivering goods to a customer in a short period of time, often less than an hour. To date, it has mostly encompassed the delivery of restaurant meals and groceries, in addition to the transport of small, daily-use items and parcels.
Again, the pandemic has had a major hand in this. Stay-at-home orders meant that people needed their daily groceries delivered to them, and so the Q-commerce sector was there to answer the call, with companies like Careem and Noon shifting more resources towards this segment to satisfy growing demand. Other, smaller companies, like FENIX, have also reallocated some resources to capitalise on this demand.