By Carlo Martuscelli
Amazon.com Inc., Alibaba Group Holding Ltd. and other online
retailers are competing more fiercely to gain a foothold in the
Arab world during this year's Ramadan, Islam's holy month of
fasting and gift giving.
Ramadan has long been a time when Middle Eastern retailers
offered steep discounts on everything from cars to toasters, but
the competition was mostly confined to traditional Arab markets and
the Persian Gulf's glitzy malls. Online retail lagged behind, but
that has begun to change this Ramadan, which started May 5 and is
scheduled to end Tuesday.
Online sales in the Middle East and Africa have doubled so far
during Ramadan this year when compared with a similar time frame
two months before the holiday, said Michele Iozzo, managing
director of Middle East and Africa at Criteo, an online advertising
platform that tracks data. In 2018, sales went up during Ramadan by
98% compared with the baseline in the preceding period, while in
2017 this figure was 70%, he said.
"We've seen significant increase in Ramadan sales, especially in
Saudi Arabia, Oman and Morocco," said Matt Zhang, head of Middle
East operations at AliExpress, the retail arm of Alibaba Group.
The sales increase occurred after Amazon, Alibaba and others
made investments in the region and began big marketing campaigns
around Ramadan.
Amazon entered the region in March 2017 with the acquisition of
local player Souq.com for $580 million. Just before Ramadan began
this year, Amazon launched its first branded Arabic-language site
in the United Arab Emirates.
Beginning in May, the U.A.E. site prominently featured a section
dedicated to Ramadan, illustrated with a crescent moon and lamp --
traditional symbols associated with the religious holidays. In
recent days, Amazon's U.A.E. site has switched to a theme around
Eid al-Fitr, the holiday of feasts and giving at the end of
Ramadan.
Last August, AliExpress upgraded its service to Saudi Arabia and
the United Arab Emirates to ensure better and more rapid
deliveries.
A number of local online retailers also have emerged, creating a
new battleground for market share. Among them are Noon.com, which
is backed by Saudi Arabia's sovereign-wealth fund and launched by
Emirati billionaire Mohamed Alabbar .
Amazon and other retailers compete to offer the biggest
discounts on items ranging from popular Ramadan foods like
candied-date confections served at the end of the day's fast, to
clothing and electronics. AliExpress has offered discounts for
specially-themes items like book holders to place the Quran or
special Ramadan lights, to the more prosaic, such as offers for
portable chargers for cellphones.
The Ramadan sales demonstrate how big online retailers are
trying to move into the Middle East, where many people are under
age 30 and tech savvy yet still do most of their shopping in
bricks-and-mortar retail.
Online retail sales in the Middle East surpassed $80 billion for
the first time in 2018, growing 22% from 2017, according to an
estimate from the Ecommerce Foundation, a Netherlands-based
industry body. While small compared with Europe, where online sales
were $535 billion last year, the Mideast market is growing faster
than any other market, and has plenty of scope to keep expanding,
analysts said.
"There is a huge amount of demand -- and there is a gap to
fill," said Anne-Laure Malauzat, principal at consulting firm Bain
& Co.
Lulu Joukhdar, a 25-year-old Saudi, said she recently shopped
for the first time on several online retail sites, including
Dubai's Namshi, to buy thobes, a traditional, often colorful dress
that women wear during Ramadan celebrations. She used to buy such
clothes at markets but wanted to avoid the Ramadan traffic in her
home city of Jeddah, Saudi Arabia.
"I found better deals and styles online," she said.
One reason that e-commerce has been slow to take off in the
Middle East in the past has been the paucity of offerings. There
were also questions about service and shipping charges, as few
online retailers have warehouses in the region and the local mail
carriers have spotty reputations.
"Delivery is still a struggle. You order your product, and it
takes forever to get to you," said Ms. Malauzat, adding that often
it is simply more practical to go to a physical store.
Both Amazon and Noon have developed their own local logistical
arms.
Retailers need Middle East consumers to buy online more often
for the region to become an important driver of business growth.
For instance, according to Bain, Saudi consumers spend the same
amount in one purchase online as their British counterparts, but
British consumers purchase online items 18 times a year on average
compared with two to three times annually for average Saudis.
Online retailers are working to build trust and brand
recognition now in the Middle East, said Ulugbek Yuldashev, chief
executive and founder of regional discount retailer AWOK.com.
"There are still many customers to win over," Mr. Yuldashev
said.
--Donna Abdulaziz contributed to this article.
(END) Dow Jones Newswires
June 01, 2019 05:44 ET (09:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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