The Middle East has one of the highest Internet penetration rates in the region. And according to Visa Middle East, shoppers spent US$3.2 billion dollars online in the Gulf region alone last year, says Ritu Upadhyay.
The fact that we like to shop is no surprise, especially here in Dubai where retail makes up 12 per cent of the emirate’s gross domestic product (GDP). But one look around and it’s clear that traditional bricks and mortar mega malls dominate this glitzy market. Is the region too ‘touch and feel’ oriented to make the major shift to online? E-tailers and investors don’t think so. Just last month, French digital publisher Webedia purchased a majority stake in Middle East-based digital media company Diwanee, which has one of the largest captive female audiences in the region, with 5 million unique visits monthly across its various sites. One of those portals is e-commerce site, mooda.com, which specifically features designers from the Middle East – something the larger retailers like net-a-porter.com and Moda Operandi are not doing.
But until now, as more mature retail markets like the US, UK and Japan have made huge shifts into the online space, consumers in the region do not seem fully convinced. Fulfillment has been a problem as well as the heavy duties often imposed by cross border retailing. When a customer is likely to return an item, is it worth them paying all those costs?
Flash sales site markavip.com has also seen a huge climb in registered users. One reason is that they have invested in infrastructure to provide shoppers with a very personalised delivery experience, as is often demanded in the region. The site allows you to choose specifically when you would like to have an item delivered and, for the higher spending customers, they will even have a delivery person wait while you try on your purchases to ensure satisfaction.
But is this sustainable and can the Middle East reach mass-market retail demands the way giants like Amazon do? Companies like namshi.com are banking on it. They have received multiple rounds of investments, which in large part have been put towards setting up warehouses that enable them to fulfill orders on a next day and sometimes even same day basis.
What will the future hold for online shopping? To learn more, join my conversation at Fashion Forward season three on Saturday at 6pm with online entrepreneurs Delphine Edde of Diwanee, Ahmad Elkatib from MarkaVIP and Namshi co-founder Hosam Arab.