Boom in Mena ecommerce as online transactions surge 44%

dubai — Middle East and North Africa (Mena) ecommerce recorded a double-digit growth in 2018, led by 27 per cent increase in payment volume and 44 per cent increase in online transactions over 2017, Visa, a world leader in digital payments said on Sunday.

Marcello Baricordi, Visa’s general manager for Middle East and North Africa, said with online shopping in the Middle East and North Africa estimated to grow nearly three-fold by 2022, the economic opportunity to be gained by modernizing the ecommerce experience is massive for both merchants and banks.

“By pooling knowledge and working closely together, we must focus on redefining what online and mobile shopping means to today’s consumers, offering them more seamless, rewarding and secure experiences,” Baricordi said at the second edition of Visa ecommerce Summit for the Mena region.

Over 150 leading merchants, issuers and government representatives attended the ecommerce Summit. The size of the Mena ecommerce market — where the UAE has the highest penetration — has been estimated variously by studies done by research firms.

According to a report by global management consultancy firm Bain & Company, the ecommerce market in the Mena region is expected to reach $28.5 billion by 2022. The report titled ecommerce in Mena: Opportunity beyond the hype noted that the market currently stands at $8.3 billion could grow by 3.5 times to reach this number by 2022.

“We estimate that the ecommerce market in Mena has the potential to grow 3.5 times by 2022, reaching a total market size of $28.5 billion and a penetration rate of seven of total retail sales, similar to what is seen in continental Europe today,” said the report.

However, according to a report by BMI Research, the Middle East ecommerce market, driven primarily by the UAE and Saudi Arabia, is poised to row by 16.4 per cent over the next three and a half years to $48.6 billion in 2022, up from an estimated $26.9 billion in 2018.

The ecommerce penetration of total retail sales, per Bain & Company, averaged 1.9 per cent in Mena and three per cent in GCC in 2017. The UAE has the highest penetration in the region with 4.2 per cent, followed by Saudi Arabia at 3.8 per cent and Egypt at 2.5 per cent.

The forecast by Bain & Company estimates that the Saudi ecommerce market will grow 27 per cent annually to reach $10 billion which will be eight per cent of total retail sales, the UAE will grow 31 per cent annually to reach $9 billion, and Egypt 33 per cent annually to reach $3 billion — by 2022.

According to Fitch Solutions Macro Research, Mena ranks fifth out of six regions in its global ecommerce index. Although Mena offers strong growth opportunities for ecommerce, this growth is emerging from a low base, and challenges persist that will limit how quickly the sector can develop. In terms of potential ecommerce demand, the consumer demographics are positive, with Mena offering some of the youngest and most affluent populations in the world.

At the Visa ecommerce summit, Muzzamil Ahussain, EVP of Almosafer, said consumer needs and behaviors in the market are rapidly changing and the ecosystem for ecommerce has to evolve to cater to these discerned needs.