eXtra e-commerce Launch

Background:

• Regional e-commerce has grown at 300% in past two years.
• Arab consumers use internet mainly for research, although over 40%* have purchased online.
• Saudi Arabia e-commerce user penetration 25.1%*.

E-commerce in the Saudi Arabia stands at:

• 3.5 million consumers*
• Spend US$8 billion* over the past 12 months

*N.B. This includes all online purchases – from flights, to hotels, to insurance, etc.

Opportunity

Consumers are hungry:

“It’s a myth that customers are scared to buy online. They are actually more than willing to use credit cards to buy something halfway across the world that they’ve never heard of. Vendors coming from a legacy mindset are scared to dabble in e-commerce, because they’re afraid it will encroach on their brick-and-mortar stores. Or they don’t realize the benefits of using online as a value-added selling channel to support their brands. But consumers are ahead of the game.”

Costs are low:

“It’s not a high cost endeavor- it’s actually a lot cheaper than they might expect. Our stuff is out there and it’s ready to go. You’re talking about sign-up costs around $300-400, and depending on the package, it could cost $200-$700 more.”

Customs challenges can be solved:

Customs systems in the Gulf and MENA are not set up for individual orders when it comes to cross-border land transport, so opening an ecommerce portal is sheltering the individual orders.

Solution & Recommendation:

We are seeing the popularity of websites such as Souq.com and Dubizzle grow every day, and with the introduction of many regional ‘daily deal’ sites, it seems that consumer trust issues with online shopping are dissipating. E-Shopping also seems to present an exciting opportunity for everyone from ‘mom & pop’ shops to large businesses to compete on an even playing field.

Here are five e-Commerce related infrastructure shortcomings presently found in the region:

• Payments:  An online payment gateway that offers online merchants the ability to accept credit and debit transactions with fair pricing.
• Logistics (Shipping& Inventory):Simple, affordable and reliable order fulfillment services specifically tailored for e-Commerce purchases.
• Design  / Development: A method to display an English website in Arabic (or vice versa), while keeping the inherent structure intact.  Alternatively, more bilingual web design and development companies in the region are required, with both pricing and talent that remain competitive with the larger agencies.
• Customer Service:  A realization that each online customer is valuable to the bottom-line and the reputation of a company – whose residual value increases after a successful sale. Investing in customer service through all channels (phone, email and social media) is paramount. A memorable customer experience will increase brand loyalty and trust and result in multiple referrals.
• Legal:  A country-specific or regional policy for online transactions.  Rules are needed to protect the customer.  Also required is a specific business license that is cost-effective, that would allow entrepreneurs to setup companies with limited investment.