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Retail in Transition: Future E-commerce Opportunities in the Middle East and Africa

June 2021

The digital revolution has been rewiring retail for years. The COVID-19 pandemic accelerated this transition as e-commerce became the default setting for many homebound consumers. The crisis-inspired surge in e-commerce is leading to a permanent shift in retail, creating both new challenges as well as new opportunities for retailers and consumer brands alike. This report explores those opportunities and challenges in the Middle East and Africa.

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Key Findings

E-commerce growth driven by sophisticated markets in the Middle East and Africa

Despite double-digit growth in e-commerce across the Middle East and Africa in 2020, product-based e-commerce penetration remained at only 2.7%. With many emerging and developing markets, the region remains underserved while most sophisticated markets such as Saudi Arabia and the United Arab Emirates drive growth. 

Mobile-centric approach vital for players to find greater penetration and growth in the region

Mobile as a platform holds elevated relevance for the Middle East and Africa, given mobile is the only digital device for millions of consumers in the region. As countries in the region embrace the platform economy, where access to services is prioritised via mobile devices, a mobile-centric e-commerce strategy that speaks to consumer behaviour is vital for success in the region.

Resource optimisation and shared infrastructures to benefit fragmented markets

The region clearly shows polarisation across both the Middle East and the African subcontinent in terms of e-commerce infrastructure where certain markets fall short of development and others rank ahead of global peers. However, the region’s geographical structure offers opportunity for resource optimisation and shared infrastructures, which can create growth synergies in a fragmented emerging market region.

Additional e-commerce appetite with current infrastructure levels is lowest globally

While the region holds pockets of growth for surplus e-commerce opportunities, the additional e-commerce appetite of the region with current infrastructure levels is the lowest globally. However, consumer demographics and need for online commerce present a greater opportunity in the region, reflecting the need for infrastructure expansion and sophistication of supporting sectors for e-commerce development.

Need for region-friendly e-commerce licences and business processes to unlock growth

Lack of digital rights for brand operators, need for website localisation and ownership models in the region are some of the aspects that require region-friendly e-commerce licences as well as facilitation from local governments. Addressing such aspects can open the region to brands and retailers across diverse product categories.

Introduction

About the report
Key findings

E-commerce Emerges As the Default Setting

E-Commerce Emerges as the Default Setting
E-commerce saw continued ascension with double-digit growth in 2020
Digital growth in the Middle East and Africa driven by sophisticated markets
Case study: Majid Al Futtaim boosts Carrefour’s digital capabilities
Category spotlight: consumer electronics led value growth in 2020
Case study: preparation meets opportunity for South Africa’s Takealot

How Shopping Behaviours Continue to Evolve

How Shopping Behaviours Continue to Evolve
Path to purchase shows varying trends across categories
More consumers shopped via mobile across all categories
Consumer spotlight: Baby Boomers embrace digital purchases
Shopping behaviours also evolved in other ways as a result of the crisis
Subscription and loyalty to enable premiumisation and personalisation
Case study: Amazon launches Subscribe and Save in the UAE

Identifying E-commerce Growth Opportunities

Identifying E-Commerce Growth Opportunities
Identifying the markets most primed for sustained e-commerce growth
E-commerce growth possible through optimisation rather than expansion
Region holds pockets of growth despite infrastructure challenges
While Saudi Arabia stands out in the Gulf, Nigeria craves for attention
Case study: Jumia opens logistics service to third parties not on network
E-commerce market is expected to expand by USD1 trillion by 2025
Electronics, food and drink to drive growth over the forecast period
Case study: Noon diversifies services to fill market gaps

How to Win in the Middle East and Africa

How to Win in the Middle East and Africa
Three countries to watch in the MEA for e-commerce development
Key opportunities
Key challenges still to overcome
Key takeaways about e-commerce in the Middle East and Africa
Recommendations for how to win in retail’s digital-first era
What to consider when evaluating your e-commerce strategy
Learn more about how to win in the digital-first era

Appendix

About the survey methodologies
About the E-Commerce Readiness Model
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