In Saudi Arabia, a kingdom where postal codes are rarely used, most people pay in cash, and shopping is done in giant air-conditioned malls, building an online retail business is no easy task.
But two powerfully-backed companies are trying to do just that, betting a young, tech-savvy population will eventually deliver up a large slice of the Arab world’s largest consumer market.
After months of delays, Noon.com launched in the United Arab Emirates (UAE) on October 1 and said it would enter the Saudi market “within the coming weeks.”
That will start a race for dominance in a largely untapped market against Dubai-based Souq.com, which is already present in Saudi Arabia and poised for expansion after its acquisition this year by Amazon.
Both companies are well armed for the fight.
Investors in Noon.com, including Dubai billionaire Mohamed Alabbar and Saudi Arabia’s sovereign wealth fund PIF, have put $1 billion into the project. The business also plans to leverage existing assets from Alabbar’s Emaar Malls, Aramex delivery service and Namshi and JadoPado online marketplaces.
Souq.com was known as the “Amazon of the Middle East” even before its purchase by the world’s biggest online retailer, having built up a following and brand relationships since its launch in 2005.
“Amazon and Souq.com will benefit from early-mover advantage in our view,” said Josh Holmes, a consumer analyst at market researcher BMI.
Online sales set to surge
Ronaldo Mouchawar, CEO & Co-Founder, SOUQ.com. (Supplied picture)