Why 2016 Economic Challenges Will Be GOOD for Middle East e-Commerce

Mo Ali Yusuf, Contributor, Feb 09 2016

Online Shopping image via Shutterstock

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This is a crosspost with Mo Ali Yusuf’s LinkedIn blog.

The world is not all doom and gloom. Sure, we have concerns in the Middle East about low oil prices, decreased economic activity, and overall economic and geo-political uncertainty, but there is a silver lining to all of this. And, that is eCommerce will see a break-through year in 2016. More consumers, more volumes, and more overall activity.  Here’s why:

1. Deal-hunting consumers are everywhere

As budgets tighten in uncertain times, shoppers will look for alternatives for obtaining premium and luxury goods and services at cheaper prices.  We’ll be more willing to accept the typical logistics delays to save a dirham, dinar, riyal, dollar, etc. Similar to 2008-2010 when we saw the emergence of online and offline outlets, and deal and discount sites, demand for bottom-line savings will be strong among the eCommerce shopper.

2. The merchant landscape is growing in all directions

With increased consumer interest, merchants will diversify their offering, catering to the longer list of consumer demands.  Competition will not drive super efficiency (yet), but as merchants look to differentiate what we will see is better service (hopefully) and better value for the end consumer.  We’ll also see an increased number of SMEs and home-based sellers use turnkey market places to explore new sales channels (as mentioned in my previous article).  Look for some of the thousands of ‘whatsapp’ and ‘instagram’ e-businesses in Saudi Arabia to move to full-blown eCommerce platforms.

3. Governments will reform to support the ecosystem

With increased economic and political pressures, look for central banks, policy makers, and commerce enablers across the region supporting eCommerce, whether that means easing restrictions on payments, shipping, corporate setup, etc., or driving new initiatives to encourage formalized businesses. Not only does eCommerce create jobs and drive value for the consumer, but also creates further downstream impact across the value chain. I’m keen to see governments push public-private partnerships to harness the eCommerce knowledge the industry has gained over the last 5-7 years.

4. Regional investors will continue to invest with tenacity

2014 and 2015 saw several blockbuster deals including Careem, JadoPado, Talabat, Property Finder, etc.  While the region hasn’t followed the global trend in looking for the unicorn, we have seen the taps open the last few years with more capital investment from seed to late stage.  While we may see the global investor slow down investments into the region, look for the regional angle, venture capital, etc. continue to invest to capitalize on the double digit eComm growth. As Warren Buffet says, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”.

-Special thanks to Mohammed Zigby for his insights

*Mo Ali Yusuf is a Director of Emerging Products & Innovation at Visa, in Dubai, UAE. He is laos the founder of 2 e-commerce startups, a startup advisor, mentor, and investor. Previously he worked with Booz, EmiratesNBD, and BankOfMontreal. All views expressed are strictly his own.

 

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