E Commerce in the region is expected to reach $15 billion this year
Dubai: As Gulf Arabs jetted off on their Eid holidays to mark the end of Ramadan on Friday, the region’s online retailers are celebrating a shift to shopping via mobile devices.
The retail haven of the Gulf may be lagging behind the world in digital consumer patterns, but the shopaholic region is catching up — and the lunar month when Muslims forgo food and water from dawn to dusk has been a boon for online sellers.
Ronaldo Mouchawar, chief executive of Souq.com, a market-leading shopping platform, says the proliferation of smartphones in large local markets, such as Saudi Arabia and the United Arab Emirates, is helping push shoppers online.
Souq.com, which is doubling sales every year and has financial backing from Naspers, the South African media group, expects a 20-25 per cent increase in traffic during Ramadan as people shop for Eid gifts, including expatriates buying presents for relatives back home.
“We see a big see push online and [changing] consumer habits due to mobile,” says Mr Mouchawar.
eCommerce in the region is expected to reach $15 billion this year, only 1 per cent of retail spending across the Middle East, according to Criteo, an online marketing company.
But that is a two-thirds increase since 2012, and the region is now regarded as one of fastest-growing online markets in the world — up 30 per cent year on year, compared with a worldwide average of 17 per cent.
Studying digital consumer patterns last Ramadan, Criteo reported a 23 per cent rise in retail sales and 42 per cent increase in online travel transactions for the most important month in the Muslim calendar.
“Some merchants are up 300 per cent in the first 10 days,” says Omar Soudodi, managing director of Payfort, an online payment platform that services the region’s largest eCommerce brands.
As the holidays start at the end of the month, however, buying patterns shift from computers to phones, with mobile purchases up 29 per cent in this period, according to Criteo. In Bahrain, almost half of all eCommerce transactions are made via a mobile device.
The fasting rhythm of Ramadan also has a big impact on buying patterns.
Fatma Al Mulla, an entrepreneur who runs one of a growing number of online cottage industries set up by Gulf women, sees strong orders through the night for her range of clothing and accessories as locals become more nocturnal.
The region’s shopping lifestyle, focused on the mall, also shifts. “We like to invite people into our houses, people don’t go to the mall — it’s time for the family,” says Ms Mulla.
Ulugbek Yuldashev, managing director of Awok, an online retailer, says online shopping jumps 35 per cent between the 7pm breakfast, known as iftar, and the night-time suhoor meal, a feast intended to sustain individuals through the next day’s fast.
Demand for kitchen gadgets has prompted UAE-based Awok to stock up on blenders and rice cookers used for family-sized meals.
Ramadan, renowned for family-oriented consumption, drives subscriptions to Netflix and Icflix, a regional streaming platform. Media channels save their best dramas and comedies for the family-focused month.
Despite the rise of online in the region, cash remains king, with about 70 per cent of eCommerce purchases settled with cash on delivery, owing to latent suspicion of online transactions.
That is one of several barriers to the growth of online retail in the region, says Saygin Yalcin, an internet entrepreneur who runs Sellanycar.com.
Limited logistics capacity is another factor, forcing successful retailers to build up their own delivery capacity within individual markets.
Tough laws that threaten jail for business operators who cannot repay debts have crimped the industry’s development, says Mr Yalcin, who sold his shopping club website to Souq.com in 2012.
Global eCommerce providers such as Amazon do not have a presence in the Middle East, allowing local names to build strong regional franchises.
“Local guys were quick to set up strong local presences, whereas big international ones went for global platforms,” says Dirk Henke, Criteo’s managing director for eastern Europe, the Middle East and Africa. “Now locals literally rule eCommerce here.”
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