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.
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 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.
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.
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.
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.
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