Only 15 Percent of Businesses in Middle East have an Online Presence; 90 Percent of Online Purchases are Bought from Outside the Region
Key Trends in the Digital Commerce Industry are Being Addressed at Gartner Symposium/ITxpo, March 1-3, in Dubai
Delivery, payment and customer service are the top things Middle East digital commerce players should focus on to grow their business, according to Gartner, Inc.
"More than half of the population in the Middle East have Internet access, while only less than 20 percent are online shoppers. The region has a lot of growth potential," said Gene Alvarez, managing vice president at Gartner. "Today only 15 percent of the business in the region have an online presence, and only 10 percent of the digital commerce transactions are between the local residents and businesses based in the region. The rest is bought from outside Middle East. With a GDP per capita among the highest in the world, a young population, and encouraging government initiatives, the Middle East will see strong growth for digital commerce in coming years."
Governments in the region have been offering online services for traffic charges, utilities payments and public services, giving quick and easy access to citizens and getting people familiarized with digital transactions. The UAE government has even set up a duty-free e-commerce hub "mahajircom", offering companies technology platforms, payment gateways and logistics services, supported by preferential business and tax policies.
"A number of companies are investing in digital commerce, trying to become the Amazon of the Middle East, yet many companies have not looked into the digital channel very seriously. There are not enough digital commerce offerings in the Middle East, leading to low customer adoption, and most purchases are bought from businesses located outside the region." said Mr. Alvarez.
Gartner identified the three things Middle Eastern digital commerce players should focus on to drive growth: : This is the No.1 challenge in the region. The delivery system is not always reliable, and some places are even without an address system. To further complicate the issue, in countries such as Saudi Arabia, women may not open doors for a male delivery person, and females are not allowed to drive. Digital commerce providers need to either invest heavily to build their own logistics and delivery force, or partner with reputable logistics providers that have good coverage in the region. They may also consider the option of in-store pickup, which can somewhat ease the delivery challenges. On top that, providers should consider offering free shipping which is popular with consumers and has a big impact on conversion.
About 80 percent of online shopping in Middle East is done using cash-on-delivery. This makes the transaction less efficient, takes a longer time to complete the delivery, and tends to have a higher return rate. Digital commerce providers need to work with payment providers to offer more payment options to streamline the shopping processes and increase the conversion rate. Other payment options include online banking, mobile wallet, cash vouchers and virtual credit cards.
Offering online help, call centres and the ability to track orders and shipping will ease customer anxiety in conducting digital transactions. A generous return policy and free return shipping will help boost customer loyalty, and encourage higher order value and repeat purchases. When offering in-store pickup, allow customers to trial the product before acceptance, giving them options to exchange or return.
Key trends in the digital commerce industry will be a main focus at Gartner Symposium/ITxpo 2016, March 1-3, Dubai.
About Gartner Symposium/ITxpo
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