AN UN­MISS­ABLE DEAL, UP FOR GRABS

ArabAd - - COVER STORY - RE­GIONAL BUSI­NESS DI­REC­TOR, UM MENA

For many brick-and-mor­tar re­tail­ers, e-com­merce is the en­emy. On­line re­tail­ers have much larger ware­houses and can sell cheaper. But there is no war be­tween on­line and off­line shop­ping. Th­ese two chan­nels in fact can com­ple­ment each other, but do­ing so is a chal­lenge. It im­plies that the power is in the hands of the con­sumers. Brands will have to meet th­ese em­pow­ered con­sumers where they want, and on their own terms.

The ZMOT has given rise to the phe­nom­ena of Show­room­ing and We­b­room­ing (Fig­ure 2). Each plays on a dif­fer­ent set of con­sumer psy­cholo­gies:

Show­room­ing al­lows con­sumers who are in store to go on­line for re­views of prod­ucts they are in­ter­ested in. It also of­fers a va­ri­ety of price points that might be cheaper than brick-and-mor­tar. Of­fers, vouch­ers and coupons are more avail­able on­line.

We­b­room­ing on the other hand plays to the strengths of the phys­i­cal ex­pe­ri­ence. Con­sumers want to try the prod­uct and walk out with it on-the-spot, in­stead of wait­ing for a de­liv­ery.

In 2012, the MENA e-com­merce mar­ket grew at the fastest rate world­wide (45% yoy) to USD 9B. By next year, it will sur­pass the USD 15B mark. But this com­pares to an off­line mar­ket of USD 425B, as only 15% of brick-and-mor­tar re­tail­ers have an on­line pres­ence. MENA also has a big gap to bridge com­pared to other global e-com­merce mar­kets. The UK mar­ket, with a pop­u­la­tion of 64 mil­lion, is val­ued at USD 94B (Fig­ure 3).

So what is hold­ing MENA back? Will 2016 be the year of e-com­merce?

In 2014, 50% of MENA con­sumers said they were planning on mak­ing an on­line pur­chase. This level is up from 20% in 2011. So the is­sue is no longer ‘if ’ MENA con­sumers will make on­line pur­chases. With the in­tro­duc­tion of new tech­nol­ogy and safety mea­sures, se­cu­rity con­cerns re­lat­ing to us­ing credit cards on­line were al­layed. So in­ter­net users now buy not only games and mu­sic, but also phys­i­cal elec­tron­ics, ap­parel and ser­vices (Fig­ure 4). The UAE, in par­tic­u­lar, ac­counts for about two thirds of the MENA ecom­merce value ; fu­eled by a large mil­len­nial pop­u­la­tion.

With in­ter­net and mo­bile pen­e­tra­tion high, it’s now a mat­ter of e-tail­ers catch­ing up, es­pe­cially on the user-ex­pe­ri­ence front. The ques­tion is whether the Mid­dle East re­tail mar­ket can catch up to de­mand. We iden­tify the key el­e­ments nec­es­sary for e-com­merce to reach a tip­ping point in 2016.

1. Im­prove the user ex­pe­ri­ence:

Sig­nif­i­cant im­prove­ment needs to be made on the user-friend­li­ness of e-com­merce sites. Search is lim­ited to key­word text with no rich­ness in con­text, such as in­clud­ing cat­e­gory man­age­ment. Tags and cat­e­gori­sa­tion of meta­data is nec­es­sary to fa­cil­i­tate re­sults, es­pe­cially for com­par­isons.

Souq.com is one of the re­gion’s largest e-com­merce ag­gre­ga­tor. But com­par­ing

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