3.4 B2C: Middle East and Africa

Only 6% of Internet users in the middle east make online purchases, and the area is lagging some five years behind the American scene. Reasons cited include a lack of choice in providers, unreliable deliveries and poor web page design, but the primary cause was a lack of confidence, with 43% concerned by the risk of security breaches when purchasing online. {1}

m-Commerce is nonetheless cited as poised to take off in Africa, with a recent survey by InMobi indicating that 46% of Africans prefer to shop by mobile phone. 44% prefer over-the-counter transactions, while only 10% make purchases on the Internet via their PC. {2}

Current hazards to ecommerce in the middle east are: {3}

1. Lack of laws covering ecommerce
2. Growing online security and privacy concerns.
3. Nonexistent consumer protection and dispute resolution.
4. Limited availability of e-payment options and online payment infrastructure.
5. High cost of broadband.
6. Lack of government support.
7. Social and cultural resistance.

Nonetheless, B2C spending in the region reached $1.1 billion in 2011, and is expected to reach $2.2 billion by 2016 (Euromonitor), or 15 billion in 2015 (IMRG).

According to a 2011 Nielson Report, the middle east makes up only 3.4% of the ecommerce market, with north Africa adding only a little more. {4} Cultural matters play a large part, as other factors look favorable:



2009 US$






% Research

/ % Purchase





2 / 1





4 / 2





5 / 2






18 / 5





15 / 2

The UAE, Saudi Arabia and Jordan would seem to offer immediate potential for ecommerce.

Indeed, encouraging figures came from a 2012 survey conducted by Arab Advisors in Jordan. {5} 24.4% of Jordanian Internet users used ecommerce to purchase products or pay bills in 2011, up from 15.4% in 2010. There were some 514,000 ecommerce users in 2011, making a penetration rate of only 8.2%, but spending increased from US$ 192 mn in 2010 to US$ 370 mn in 2011. Ecommerce penetration in Egypt was lower, at 3.4%, but Euromonitor expect Egypt's online expenditure to more than triple in the next 4 years, reaching $447 mn in 2016. Euromonitor's 2016 prediction for the entire region is $2 bn.

A.T. Kearney's 2012 E-Commerce Index looked at 18 factors favoring ecommerce (infrastructure, regulatory, and retail-specific variables) in 30 countries, presenting the score for the top ten. {6} These were China at 78 points, Brazil at 77, Russia at 60, Chile at 59, Mexico at 50, UAE at 50, Malaysia at 48, Uruguay at 45, Turkey at 43 and Oman at 41.

The United Arab Emirates had a 76% personal computer household penetration rate, and a retail sales per capita of US$ 9,155 (on par with the United States and Sweden). The current size of its online retail market (US$ 227 mn is relatively small, but the UAE serves as an ecommerce gateway to other oil-rich middle eastern markets. On the debit side, credit card penetration was low, and bricks-and-mortar stores also offer free delivery as a customary service, diminishing the convenience of online shopping. {6}

Oman had a 62% personal computer household penetration rate, and the average Omani citizens owns more than one phone, including smart devices that connect to the Internet. At US $111 mn, the Omani online market is small, however, though the domestic retailer OHI Electronics launched ecommerce operation in 2011 as part of a multichannel strategy.

With credit card fraud is cited as a continuing concern in the region, some 40% of ecommerce purchases are cash on delivery. {7} Online purchases averaged US$ 735.07 with EmiratesAvenue.com, however, even though credit card fees for online transactions in the UAE were 5 to 6%, considerably more than in Europe. Unfortunately, some 15% of COD purchases are returned, while only 2% of credit card purchases meet that annoyance. {9}

While the middle east and Africa are still the least developed regions in ecommerce, sales in the region are growing faster than anywhere else in the world, a 2012 eMarketer study found. {8} The 2012 spending base is smaller than that of Latin America ( US$ 20.6 bn to US$ 36.82 bn), but the recent startups of Namshi, ShopGo, and MarkaVIP are improving awareness of possibilities.

Uncertain and costly delivery services are the main difficulty facing ecommerce on mainland Africa, together with poor credit card processing services and high marketing costs. {10}. Excellent ecommerce sites do exist, however, {11} and South Africa has thriving ebusiness ezines. {12} Nonetheless, ecommerce sales in Africa and the middle east may reach $45.49 billion 2016, up from $14.41 billion in 2011, an eMarketer study predicted. {13} Similar figures are given by AraBiz. {14}

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