Study: Reliable online payments crucial to B2B e-commerce growth in the GCC

Study: Reliable online payments crucial to B2B e-commerce growth in the GCC 

By: Abu Dhabi SME Hub

The majority (82%) of businesses surveyed in the UAE and Saudi expect the use of e-commerce to become universal in the coming years.

Tradeling, the tech startup focused on business-to-business (B2B) transactions in the MENA region, has released a study highlighting five key trends in the B2B e-commerce sector. The White Paper, Pivoting to Digital: The Transformation of B2B e-Commerce in the Middle East, shows how the unprecedented challenges brought on by the global pandemic necessitated a new model of retail that is driven online. 

The top findings of the survey, one of the first authoritative studies on the impact of the COVID-19 pandemic on trade and business confidence in the region, focused on five key areas: Business Community, Growth Industries, E-commerce, Small and Medium-Sized Enterprises, and COVID-19

The study evaluated the immediate impact of COVID-19 as well as the role of B2B in mitigating it. Nearly two-thirds of all respondents in the UAE and about half (49 percent) of Saudi businesses surveyed said the pandemic has had a negative impact on their business. However, most companies (79 percent) expect to make a complete recovery by the end of 2022, and over half (57 percent) are confident of a business recovery by the end of this year. Businesses reported an increased use of B2B e-commerce due to the pandemic with 82 percent, on average, citing that their use has increased. B2B e-commerce has had a positive impact on businesses in adapting to a new reality with most businesses opting to conduct transactions online as opposed to in-person due to COVID-19. 

Evaluating the market sentiment a year after the pandemic, the top finding shows that businesses expect to rebound strongly, with greater investment and higher employment in the year ahead. The survey showed that more than half of businesses (52 percent) said conditions are ‘good’, highlighting the return to a more positive market sentiment. In the UAE, while 45 percent said that existing business conditions are ‘good’, 41 percent said it is neither ‘good’ nor ‘bad’.

Asked specifically on the status quo to business-to-business customers, 50 percent of respondents in both countries said the market conditions are ‘good’. Most respondents, especially in the UAE are optimistic that business conditions will significantly improve a year from now, with over three-quarters (78 percent) in the country sharing their optimism on the business environment improving. The positive outlook reflects in more businesses expecting to hire further employees as well as increasing their business investment. More than one-third (43 percent) said they expect the number of employees in their business to increase in the next year. Similarly, when asked about their expectations on investment in their business over the next year, more than half (53 percent) said it would increase, compared to only 32 percent who said investment levels will remain the same, and 15 percent forecasting a decline. 

E-commerce and tech lead economically

The survey found that e-commerce and technology are set to outpace other sectors of the economy in the coming years as they increasingly leverage digital opportunities both in B2B and B2C trade. They see a strong outlook for e-commerce in the medium and long-term, building further on the gains achieved in recent months, as enterprises pivot to a ‘digital-first’ model to engage with their customers. In the UAE, 86 percent of businesses feel technology will assume greater significant followed by e-commerce at 84 percent. Artificial intelligence (AI) and Machine Learning are seen as the most important technology impacting business over the next five years. Specific to B2B e-commerce, 56 percent of all respondents see AI as the biggest gamechanger. 

The study shows that e-commerce is increasingly becoming a preferred platform for purchasing business supplies in both countries. Nearly half (46 percent) of all respondents said they primarily purchase online. The majority of businesses in the UAE and Saudi expect the use of e-commerce to become universal in the coming years with more than four-fifths (82 percent) of respondents saying businesses will use more B2B e-commerce eventually. However, respondents said one of the challenges in driving B2B e-commerce will be the need to strengthen online payments as many businesses in the region use physical payments for supplies. More than two-thirds (68 percent) of respondents said they still make physical payments such as cash or cheques on all orders.

A large proportion of SMEs believes that B2B e-commerce offers them opportunities to expand and diversify adding that they are more optimistic that B2B e-commerce will allow a more scalable and diverse range of SMEs to emerge from the region. Eighty-three percent of all respondents also agreed to the statement that B2B e-commerce will help local SMEs scale by finding new customers across the region and globally. 

About the study

Tradeling commissioned PSB Middle East, a global strategic research and analytics consultancy, to run an independent survey in the United Arab Emirates and Kingdom of Saudi Arabia. The findings reveal the opinions of 500 business decision-makers in both key markets. Of the respondents, 384 were in managerial positions and 116 in Managing Director or higher. Nearly half of the businesses (247) employed less than 100 employees and the rest (253) had over 100 employees. 

You can download the full report below:

You might also like