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Web clicks with shoppers as Mideast retail sites see revenue doubling

Published: Updated:

Online shopping is on the rise in the Middle East, with regional e-commerce sites forecasting that industry revenues will at least double in the year ahead.

Ahmed Khatib, founder and CEO of the regional online shopping website MarkaVIP, says e-commerce is growing exponentially as more consumers turn to the web.

“I would say that [regional e-commerce revenues are] doubling year over year,” he said. “MarkaVIP grew by 500 percent from 2011 to 2012.”

The Dubai-based e-commerce website JadoPado.com, which launched in March 2011, says its revenues hit $4m in March.

“We project to become a $10m business by March 2014,” said Omar Kassim, founder of JadoPado.com.

Despite the rosy growth predictions, online shopping revenues are still miniscule compared to the rest of the market.

According to JP Morgan, global e-commerce revenues were forecast at $680 billion in 2011, an 18.9 per cent rise on 2010.

In the U.S. alone, e-commerce was worth nearly $225 billion in 2012, representing more than 5 percent of the country’s total retail sales, according to figures from the U.S. Census Bureau.

Yet the proportion in the Middle East is much lower, said Kassim.

“The e-commerce share in the Middle East is less than 1 percent of total retail,” he said. “Offline is not going anywhere, but e-commerce will eat its way up there slowly,” he added.

MarkaVIP’s Khatib agreed that there was a great opportunity for online retail in the region.

“The offline industry [in the Middle East] is worth roughly $500 billion, so if [online] can take 5 percent of that, that’s already a massive market,” added Khatib.

Wissam Otaky, chief financial officer of MarkaVIP, was also positive about e-commerce in the region.

“There are 90m people using the internet in the MENA region, and those are expected to increase to 240m in the next three years,” he said.

Figures from research companies and top internet firms show that internet users in the region are increasingly using their mobile devices to browse the internet.

This trend has also be seen in online retail.

“It is inevitable that everything will move towards mobile in the Middle East,” said Khatib.

“Today, 25 percent of the revenue on MarkaVIP is generated through mobile, without us having a mobile application, or a mobile platform,” he added.

For MarkaVIP, this figure was reached in early 2012 and stabilized there, according to Otaky.

JadoPado launched a mobile version of its site in 2013.

“While it’s too early to attribute a significant percentage of sales to mobile… we feel that mobile e-commerce may be a potential high growth area by 2014/2015,” according to a statement on the website.

“Our latest figures [from June 6th, 2013], 10 percent of transactions in the UAE came through mobile,” said Kassim about JadoPado.