NOON TO BRING EBAY PRODUCTS TO REGION IN NEW DEAL

Global e-commerce giants believe Middle East’s small online shopping sector is set for major growth

Noon, the $1 billion (Dh3.67bn) e-commerce venture backed by a Dubai businessman and Saudi Arabia’s sovereign wealth fund, is expanding globally via a partnership with eBay amid competition with Amazon-backed Souq.com

The tie-up, which will allow regional customers to access products in the US and other parts of the world, will be available in the second half of the year in the UAE and Saudi Arabia, Noon said yesterday.

Noon and eBay will also explore opportunities in marketing and know-how to capitalise on the “strong growth” of online shopping in the Middle East. “We are offering our customers access to products that are not otherwise readily available in the region,” said Mohamed Alabbar, the founder of Noon.

“E-commerce continuously evolves, and this partnership guarantees Noon stays on top of the trends and consumer preferences.”

Ebay’s partnership with Noon follows the acquisition of regional rival Souq.com by US e-commerce giant Amazon last year. Global companies are entering the market on a bet that the Middle East’s online retail scene is poised for a boom, driven by a young, tech-savvy population and high smartphone penetration levels.

The Gulf’s e-commerce market is expected to grow to $20bn by 2020, global consultancy AT Kearney said in a report.

Noon is a joint venture between Mr Alabbar, the founder and chairman of Dubai developer Emaar Properties, and Saudi Arabia’s Public Investment Fund.

It will start offering products on the eBay marketplace through a standalone app and will provide doorstep delivery in the UAE and Saudi Arabia, Noon said.

Mr Alabbar is increasingly interested in e-commerce ventures. Emaar Malls Group, a unit of Emaar Properties, bought a 51 per cent stake in online fashion retailer Namshi last year. His Noon venture bought market platform Jado Pado and a fund led by Mr Alabbar took a stake in Middle East Venture Partners.

MH Alshaya, the Kuwaiti franchise operator present across the Arab world, Turkey and Russia, bought a stake in Noon last year. Alshaya, whose franchises include Starbucks, Muji, Boots, The Cheesecake Factory and Victoria’s Secret, was the

first retailer to announce a partnership with the e-commerce platform.

Competition in the regional e-commerce space accelerated last year when Amazon bought Souq.com for $680 million, after an attempted 11th-hour bid from Emaar Malls, operator of the world’s biggest shopping centre.

Despite the global interest in the Middle East e-commerce market, the sector is still in its infancy.

Many in the Middle East still prefer to shop in stores. Online shopping accounts for a tiny portion of retail activity in the UAE and the wider region.

An AT Kearney report shows that e-commerce contributes relatively little to the GCC’s economy, accounting for just 0.4 per cent of gross domestic product in 2015. This is compared to 1.8 per cent in France and 2.2 per cent in Japan, countries with similar GDP per capita levels to the GCC.

The enduring popularity of shopping malls in the UAE, both as a retail and social experience, have also hampered the growth of e-commerce.

Many customers in the region are also reluctant to purchase goods and services online using a credit or debit card.

This is obliging online retailers to offer cash-on-delivery services amid concerns about online credit card fraud.

Last year, Dubai said it plans to create a Dh2.7bn e-commerce free zone close to Dubai International Airport to tap the Arabian Gulf region’s e-commerce market.

Dubai Commer City, a joint venture between Dubai Airport Freezone Authority and Wasl Asset Management Group, will stretch over 195,096 square metres in Umm Ramool.