Capillary acquires US-based Brierley+Partners    Read more >

Capillary named a Leader in SPARK Matrix™: Customer Loyalty Solutions, Q2 2024 Report     Read more >


Omnichannel Commerce

Ecommerce landscape in the Middle East: a Mirage or an Oasis?

According to many retail industry experts, and talking heads, the Middle East and Africa region is going to be the next big growth market for ecommerce.


Capillary Marcom

4 Min Read

September 09, 2018

According to many retail industry experts, and talking heads, the Middle East and Africa region is going to be the next big growth market for ecommerce. The gulf region especially, is being touted as the market that’s set to grow exponentially within the next couple of years. Infact, according to PayFort, the Middle East ecommerce market would grow to $69 billion by 2020, almost doubling in size in just a few years. According to Statista, overall growth across the Middle East and Africa would be at a CAGR of 11% in the next four years (2018-2022).


Well this is all good, but what’s the current scenario of e-commerce in the Middle East? An oft quoted Gartner study stated that, in 2016, only 15% business in the Middle East had any online commerce presence and back then, 90% of online purchases made by residents were from foreign businesses. Forbes Middle East says that currently only 2% of retail in the Middle East took place online, despite the region having one of the best internet penetration rates in the world.


The potential for e-commerce definitely exists in the Middle East. Let’s take a closer look at the factors that are favourable for growth, challenges the region faces, key markets in the region, key players in these markets and buying behaviour of consumers in these markets.


Fueling e-commerce growth


The Middle East and especially the gulf region, benefits from high spending potential as the region boasts of a high per capita income. The fact that the internet penetration and social media penetration is also some of the best in the world means Middle East is ripe for online business.


A Hootsuite Hootsuite study says, UAE has the world’s highest social media penetration, while Saudi Arabia had the highest social media user growth in the world. Deloitte shared similar findings in 2017 which stated social media penetration of 99% in UAE and Qatar, and 73% YoY growth in Saudi Arabia.


The Middle East region has one of the highest social media penetration in the world with 99% in UAE and Qatar, and 73% YoY growth in Saudi Arabia


When it comes to internet penetration, the region is again, well above the global average of 51.7%, with more than 60% of the population using the internet according to Deloitte’s Going Digital Report. UAE especially leads here as well with more than 80% internet penetration in the state which is again, one of the highest in the entire world. If you look at the MENA region as a whole, the internet penetration there has been rising rapidly at 15% YoY. Smartphone penetration is also unusually high in the region. For example, in Saudi Arabia, 9 out of 10 people use a smartphone and most of them use it to go online. The great cellular connectivity in the region also helps.


High social media, internet penetration and connectivity is only one side of the story when it comes to the potential of ecommerce in the Middle East. Another side is favourable regulations for online commerce, especially in the GCC. Let’s take the case of UAE where the government actively participates in making it easier for tech businesses to operate out of the region. For example, in the UAE, new e-commerce regulations from the Dubai Free Zones Council were made to promote more foreign direct investment into the ecommerce sector in Dubai and help make Dubai, more attractive for ecommerce companies. The city also boasts of neighbourhoods such as CommerCity, which is a $735 million project that’s dedicated to ecommerce and located right next to the Dubai airport. This is apart from Internet City in Dubai, that according to reports is already full and is going to be expanded soon. Such initiatives are also under development in other countries in the GCC. What’s also interesting is the growing popularity of e-governance in these countries which shows how both the government and its citizens are very comfortable going online to get various tasks done.


Challenges to e-commerce


One of the primary challenges when it comes to e-commerce in the Middle East and the GCC is the lack of area codes, which can hamper last mile delivery. The big problem to solve for many ecommerce and logistics companies is to bring down the time and cost to deliver in the region, as most consumers have also suggested that the delivery time is the biggest deal-breaker for them when it comes to buying online.


Digital payments is another area where the region lags behind when compared to developed markets. Except for the UAE, other countries in the middle east are yet to completely adopt online and mobile payments. Cash on Delivery is still a primary mode of payment in the region, which brings up the cost of operations for ecommerce players. It can make up around 70% of all ecommerce transactions in Saudi Arabia according to consultancy Hall & Partners.


Markets that’re driving commerce in the Middle East


When we look at key markets in the GCC, two of them come into the forefront. One is UAE, the other is Saudi Arabia. In North Africa, Egypt is one of the biggest markets that has a huge potential to growth in the future. Although Bahrain, Oman, Kuwait and Qatar also have strong ecommerce presence and growth, the relatively small population in these countries means that their contribution to the overall region numbers is also relatively small.


United Arab Emirates


The UAE is one of the largest and most mature markets in the Middle East today for ecommerce. According to PayFort it was valued at $27 Billion in 2016. BMI states that by 2020, the market would be worth 45.6% of the total Middle East market. Great infrastructure, ease of doing business, and a tech savvy, cosmopolitan population with high spending power makes the country very favourable for online commerce.


Kingdom of Saudi Arabia


Saudi Arabia is also a huge market for ecommerce in the Middle East, with the same PayFort study valuing it at $22 Billion in 2016. Growth in the market though could be gradual when compared to UAE and other countries in the GCC. This is primarily because of lack of retail infrastructure and government initiatives that aim to promote ecommerce and other tech businesses. The ‘Saudization’ scheme by the government is also said to make it a little more difficult for international brands and businesses to make a mark in the country, although national businesses may get a boost due to this. By 2020, BMI says that the Saudi Arabian ecommerce market could be 29.1% of the region.




Egypt has had a storied ecommerce history, having established some of the region’s firsts, such as online food ordering way back in 1999 with Otlob. Yet, ecommerce penetration in the country is still at a nascent stage. A study by the country’s Ministry of Communications and Information Technology (MCIT) said that, ecommerce only comprised 0.4% of the total retail trade in Egypt. But this is also set to go up very quickly, as the region has one of the largest population of internet users in the Arab world. The MCIT is also committed to the growth of ecommerce in the region, with policy and development being focused towards this cause, making the market very attractive for ecommerce players.


Who are the Middle East’s biggest ecommerce players


Apart from various brands and their ecommerce stores, there are a few prominent ecommerce marketplaces in the Middle East. The biggest is, which had 50 million customers and operated out of all the countries in the GCC, when Amazon acquired them in 2017. The same year, another regional upstart, was launched by Mohamed Alabbar, the chairman of Emaar. Namshi, Ali Express, and Ebay etc., are other prominent marketplaces in the region.


UAE: Souq, Nahel, Sukar, JadoPado

Saudi Arabia: Ali Express, Amazon, eBay, Souq

Qatar: Amazon, Lulu, Souq, IKEA

Oman: Lulu, Ali Express, Souq

Kuwait: Xcite, Ubuy, Souq

Bahrain: JadoPado, Alshop, Souq, Namshi

Egypt: Jumia, Souq


When it comes to food delivery, some of the popular players in the region are Talabat, Deliveroo, MakeMyMeal, Otlob etc.


Consumer behaviour in the Middle East


How many are buying online


According to survey portal Statista, ecommerce user penetration in the Middle East and Africa region stood at 54.6% in 2018 and would grow to 58.8% by 2022.


Who is buying online

PwC’s Total Retail Survey, 2017 took an in depth look at buying trends in the Middle East. They found out that younger people were more likely to shop online in the region, with 36% of those who were aged between 18-24 shopped online, at least once a month, when compared to only 13% of those who were aged 55 years or more. According to Hall & Partners, there is a significant number of women in the UAE who prefer to shop online, with around a third of those surveyed buying something online, every week. Similar stories are reflected across the mature markets of the Middle East.


Around a third of women in the UAE buy something online every week


Why are they buying online


The motivation to buy online differs for different markets and different demographics, however when we look at the broader trends, we can see that the lower price of goods online was the biggest driving factor towards an online purchase as 40% consumers stated that as their major motivational factor according to PwC’s Total Retail 2017. 31% also said that greater product selection was a factor towards their purchase. Suprisingly, only 17% said that convenience was a factor for shopping online. This could be mainly due to higher delivery times, and a prevalent ‘mall culture’ in the Middle East, although the trend is gradually changing as it becomes easier to shop online and as the quality of service increases.


What are they buying online


According to  PwC’s Total Retail 2017, these were the major categories when it comes to e-commerce in the Middle East. Books, music, movies and video games category lead with 54% of those surveyed shopping online here. This was followed by Health and Beauty at 48% and Consumer, electronics and computer – 44%. Jewellery and Watches, Clothing and Footwear stood at 42% and 41% respectively, whereas Furniture and Homeware, Household Appliances stood at 35% and 31% respectively. Surprisingly, online groceries were a category that wasn’t as popular yet in the region with only 27% of people admitting to buying them online.


How are they buying online


56% of Middle Eastern shoppers were on mobile devices while shopping online and 52% of them were influenced by social media reviews while making a purchase. Although PwC states that 80% of Middle Eastern Ecommerce sales were paid for through Cash On Delivery, UAE is again an outlier here, as according to, over 60% of their transactions were through credit cards.


56% of Middle East shops on mobile devices and 52% of shoppers are influenced by social media


Trust is an important factor for consumers buying in the Middle East as 62% of them were concerned about their personal information getting leaked online. 60% consumers were more likely to buy from brands they trusted, and 32% remain loyal to their favourite retailer because of their trust in the brand.


48% consumers had also stated that they were influenced to make repeat purchases because of the attractive offers that were communicated to them. Social media was another influential channel where 48% consumers were engaged through promotions.


Hence having a trustworthy, secure and mobile friendly online ordering platform is important in the region. Cross-channel engagement campaigns with strong social media strategies is also something ecommerce operations in EMEA must adopt.


Having a trustworthy, secure and mobile friendly ecommerce platform is imporant in the Middle East as 62% consumers were concerned about personal information being leaked online and 60% were more likely to buy from brands they trusted.

Future trends when it comes to Ecommerce in the Middle East




Language and localisation are very important aspects of commerce in the Middle East as even the Arabic dialect can vary widely across markets. Brands have slowly started to understand this and have started to model their online presence according to each market’s preferences.


High Technology


The Middle Eastern market is also going to reflect similar tech trends as other markets across the globe, with increasing use of big data analytics, artificial intelligence, chatbots, faster delivery means, mobile payments, and omnichannel retailing, all used to aide commerce. With the increase of tech companies in the region, the sharing economy and subsequently, the internet economy would also see a significant rise in the Middle East. Cloud services are another area where the region saw rapid growth, with the market growing by 22% according to Gulf News.


The Middle East’s omnichannel future


With the young, tech savvy population, high smartphone and internet penetration and well established retail network, we can see that retail in Middle East is going to grow across channels. Ecommerce and brick & mortar retail would work at helping each channel sell more as more mature markets across the world have shown. Retailers today must focus on getting online and making consumer experience seamless and connected across all channels to unlock their next phase of growth.


How to go omnichannel in the Middle East


Being present across marketplaces


As a brand, it’s important today to have presence in the major marketplaces in the Middle East. Marketplaces such as Souq, Noon, Namshi, eBay, Amazon etc. can be a great way to reach more consumers and increase sales. Marketplace enablement solutions that help you to list, sell and process orders across multiple marketplaces, from a single dashboard, can make it very easy to do so.


Having your brand’s own ecommerce site


Ecommerce consumers in the Middle East are not just restricted to purchase from online marketplaces, but increasingly are buying directly from the brands that they trust. Hence it’s important to establish your own brand website early and extend your offline business to online channels. Today, you could be missing out on sales without having cross channel presence. Setting up your ecommerce website could be the first step you take towards making your business consumer ready for today and future ready for tomorrow. Let’s see what are some important factors you should take into consideration while choosing the right ecommerce platform for your website.


Making consumer experience seamless


You must ensure you are providing your consumers with the easiest possible purchase experience online. This means fast intuitive, responsive consumer websites and mobile ready ‘app like experiences’ on Progressive Web Apps. Offering multiple checkout options such as click and collect, or home delivery, is also important and so are seamless payments through the consumer’s preferred payment method.


Being ready to extend and grow


Your ecommerce platform must allow you to be agile and extensible so your business is completely future ready. Fast go-to-market time, multi-country, language, and currency support is a must have for running commerce in regions as diverse as the Middle East. Allowing business users to easily set-up and run websites and promotions without help from IT is also a helpful addition. Having ready integrations with POS, logistics, payment gateways, ERPs, etc. could go a long way into making operations smoother and easier.


Personalising experiences & socialising engagement


Consumers today expect relevant and personalised experiences while they shop. Your ability to deliver on these personalised experiences to your visitors, starting from the look and feel of your website, to the products that are on display to them could have a dramatic effect on conversions. Personalised engagements and promotions can also increase visits and sales. You also need to look into availability of services such as Conversion Rate Optimisation, Search Engine Optimisation, Digital and Social Media Marketing to reach your consumers and convert them.


Making your business easy to operate


An easy to use platform with intuitive UI that allows you to create, upload and manage product catalogs, website content, and promotions, with simple drag and drop functionality can help ease day to day operations by allowing any business user to make changes on the website quickly. A sophisticated order management system on the other hand can make order processing and fulfilment, quick and efficient. Ability to easily reconcile accounts, refunds and manage tax compliance across regions are also important while running ecommerce business across the Middle East.


Ensuring consumer trust


Finally, your ecommerce platform needs to be completely scalable, having the ability to auto adjust to handle any traffic or order volume. Having good stability and uptime is also important to ensure your site is always available to your consumers. Speaking of consumers, keeping private and identifiable consumer data and payment data secure is really important today, especially in the Middle East where trust is known to be a significant aspect of loyalty when shopping online. Hence you should give utmost importance to the security capabilities of your platform.


To understand more about your ecommerce opportunities, ecommerce technology or to get more tips and tricks on ecommerce, speak to an expert today.

CapillaryTech Logo
Capillary Marcom

A bunch of SaaS enthusiasts hailing from B2B industries, with several years of experience in the field of Loyalty and E-commerce. This expert team supports Capillary Technologies to find the best customer loyalty, engagement and marketing solutions for customers and their businesses.

Aauthor Name

Capillary Marcom

A bunch of SaaS enthusiasts hailing from B2B industries, with several years of experience in the field of Loyalty and E-commerce. This expert team supports Capillary Technologies to find the best customer loyalty, engagement and marketing solutions for customers and their businesses.

Similar Articles

Recreating The Personalized In-store Experience With Digital Commerce

by Rebecca George

August 11, 2020 | 4 Min Read

Six months into the pandemic and the economic impact and fea

What’s ‘New Retail’ & Why China is Leading it?

by Ankur Saigal

January 30, 2018 | 4 Min Read

When I visited China over a decade ago, e-commerce was still

How Dark Stores are Revolutionizing Grocery eCommerce

by Dominic Machado

February 24, 2020 | 4 Min Read

Let’s accept it. It is a chore. Yes, we are talking

Contact Us

Get the best loyalty &
customer engagement platform out there!
  • Design industry shaping loyalty programs
  • Integrate easily and go live quicker
  • Deliver hyper-personalized consumer experiences
Request A Call
    [shield-notbot-nonce] => 348f3981e4
    [wp-wpml_current_language] => en