For the past few years, the Middle East has been at the forefront of global e-commerce growth, with cross-border e-commerce booming and providing huge prospects for multinational brands and retailers seeking new revenue streams to compensate for losses incurred by COVID lockdowns.
According to PayPal, in 2020, 86% of Middle Eastern customers will have made online purchases from brands and shops outside their home nation, up from 61% in 2018. In reality, e-commerce in the Middle East grew by 36% year over year in 2020, keeping its position as the world’s fastest-growing e-commerce market, hitting $23.2 billion, with post-COVID predictions indicating that it will top $50 billion in just a few years.
High potential for cross-border e-commerce
Cross-borders e-commerce allows companies and sellers in the Middle East to distribute products directly to customers without needing to register the products, store them locally, or create a legal entity.
While many platforms export to over 200 countries, when it comes to interacting with local consumers in any of those regions, this is a case of breadth over depth. Instead, organizations should take advantage of cross-border chances to create long-term businesses by connecting with customers and learning about the culture and dynamics of their target market. As a result, a steady and organic flow of clients is established over time.
Mid-year 2020, cross-border online sales in the Middle East increased by 214% year on year, compared to 21% globally and 9.5% in Europe, a trend that is projected to continue post-COVID19.
The Middle East is a lucrative but difficult region to navigate
When compared to other locations, expanding to the Middle East presents some extra hurdles, including, but not limited to, the legislative and regulatory ecology, payment methods, logistics, and, most crucially, language, culture, and consumer behavior.
The Middle East is made up of a number of countries, the largest of which are Saudi Arabia, the United Arab Emirates, Egypt, Kuwait, Qatar, Bahrain, and Oman. Each of these countries has its own import regulations, taxation, and customs laws, making doing business in the region difficult for brands with no prior experience.
Over 70% of Middle Eastern consumers prefer to pay in cash for online purchases when the item is delivered to their doorstep, in addition to a variety of local payment methods that differ per nation.
Furthermore, nearly two-thirds of the population in the region do not speak English and must interact with information in their native language. Even though all of the countries in the region speak Arabic, each has its own dialect, making it difficult to implement a consistent content and marketing strategy for e-commerce.
That’s why it’s very necessary that you use the right Arabic localization company. For the highest efficiency, you may use a service like Writeliff as combining great quality and fair cost.
What to keep in mind before expanding into MENA
To operate their e-commerce successfully in the Middle East, brands and retailers considering expanding to the region must be able to overcome several challenges and obstacles. These are some of them:
- Creating a good e-commerce platform with Right-to-Left capability so that Arabic content can be included.
- To be able to get crucial rights and accelerate business growth, you must have a legal presence or partner with a local partner.
- Choose the right logistics partner to ensure that customers receive reasonable lead times and shipping prices.
- While Middle Eastern consumers are extremely sociable and heavy social media users, the most often utilized platforms vary by country, gender, and age.
- While selling on marketplaces may appear to be a simple solution, it often dilutes the brand’s image and value. In addition, the brand’s margin was reduced by more than half. Partnering with local distributors has the same concerns since it allows brands to lose control of all of the above.
The best expansion strategies for selling in the ME region
Following COVID, brands have understood the necessity of establishing a long-term Direct-to-Consumer online company.
The following strategies can help brands expand their e-commerce to the Middle East:
- Creating own offices and operations in the region, which is a costly and dangerous alternative because most multinational companies lack the experience required to handle the market’s obstacles and intricacies.
- For brick-and-mortar businesses, partnering with a local distributor could be a good idea. However, due to high operational costs, these distributors’ business models are very traditional and eat up the majority of the brand’s margins. They also lack experience managing e-commerce enterprises and a basic understanding of the online customer in their respective markets.
- Without developing infrastructure, activities, or a local presence, sell cross-border. This can be accomplished in one of two ways:
- Collaborate with a global e-commerce agency, allowing the company to sell across many locations without having to fully localize its presence in any of them. As a result, you’re missing out on possibilities to build a long-term consumer base and physical presence.
- Collaborate with a local e-commerce enabler to provide full localization and enable the brand to navigate the market with ease, resulting in a loyal customer base and organic growth over time.
Middle Eastern consumers are a diverse group of people with many different needs. Understanding the nuances that affect them will be key to your success in this market, so do some research on who they are and what their buying habits are before you start selling!
The Middle East is a huge market that has been underserved by international retailers. If you’re looking for an untapped niche to start your e-commerce business, this region may be perfect for you. But with these important tips, you’ll have the basics covered and be well on your way!
In this article, we’ve covered everything you need to know about getting your business started in the Middle East. We hope that our advice will help you get a successful e-commerce business off on the right foot and increase your chances of success while doing so.