E-commerce in the Middle East – On the Up and Up!
E-commerce is on a massive upward trajectory in the Middle East and North Africa (MENA) region. According to a recent report issued by Visa[1], nowhere else in the world is growing as fast: MENA experienced a 45% increase in 2012, compared to the previous year, with transactions soaring from $10 to $15 billion.[2] The fastest growing markets
For retailers who have tended to ignore or avoid this market, in favour of others that have seemed both more stable and lucrative, those figures are bound to make them think again. This is fertile territory and many of their rivals are now clearly reaping the rewards to be had there. So expect to see competition hotting up!
What are people buying online right now and how can the MENA region overcome some fundamental factors to drive growth even higher? The popular and growing areas for e-commerce right now are banking, paying bills and booking travel. Purchasing items and/or services is still not as developed as in the major European markets, and clearly this offers vast promise for those who can exploit its vast potential in the MENA region[3].
That said, and despite its impressive performance of late, the MENA region is still not actually expanding at nearly the same rate as the rest of the globe when it comes to e-commerce. Why is this? In part it’s down to lack of confidence and trust online; according to a recent survey by Onecard, 56 per cent of respondents based in the Middle East said they were concerned about credit card fraud and the region faces the same barriers seen elsewhere around the world, where lack of trust and payment security are regularly highlighted as key concerns for people when choosing to shop online. Additionally a report from Deloitte highlights[4] that it is there are three other factors that are holding growth back:
First, there are the logistical issues around physical addresses (they are not well defined enough) and also the postal system itself, whose infrastructure is poor.
Secondly, there is an absence of the relevant e-laws necessary to provide proper levels of protection for consumers and vendors.
And, finally, it can be expensive for small businesses to set up payment gateways, thus deterring them from entering the market – a factor that is reflected in the widespread popularity of cash on delivery (COD) payments across the region. Strikingly, while there are an estimated 90 million internet users in the Middle East, a mere 15% of Middle East companies have an online presence.[5] Moreover, some 70-80% of online purchases are COD, with just 30% paid for online – and that despite almost 50% of consumers owning credit cards.
At the same time, it should be said that such flexibility of payment types has certainly made e-commerce more accessible, and more attractive, to users; and no doubt has contributed substantially to the surge in sales that has taken place recently. Whilst ‘cash on delivery’ is a good solution to consumers’ lack of trust in online transactions, it can hinder the growth of e-commerce in the region due to difficulty in coordinating home delivery services and ultimately it’s much less cost effective than taking payments online. As mentioned above, ecommerce comes branded with what is a typical online question for end users and retailers alike: ‘Are you safe?’ Because, unless they truly believe that they can operate securely online – and that transactions can be undertaken and completed in a tightly protected environment – the massive potential that MENA offers will simply not be realised.
These issues are of course being addressed and in anticipation of this it’s worth considering that in order to Be successful online, and to capture more consumer mindshare and business, sites need to be:
- Accessible (particularly for mobile) – consider responsive design to meet the needs of your visitors
- Easy to use – e.g. clear navigation and extensive search
- Trustworthy – demonstrate that your site can be trusted with credit card details using clear security indicators such as SSL, and through the use of online trust marks such as the Norton Secured Seal
- Fully localised into your target markets language.
All well and good… in theory. The reality is that, while it’s relatively simple to set up an e-commerce site, there is still widespread ignorance of the potential hazards that exist when sending data via unsecured connections. In fact, many customers still do not even know that SSL certificates exist to protect them online.
Clearly, sites in the Middle East region that really want to be successful should be using SSL and trust marks to demonstrate that they are professional, dependable and safe to do business with. Indeed in my opinion SSL certificates should be mandatory for any ecommerce site or for anyone else that asks customers to submit any kind of personal information. Using SSL is also the clever option for companies that don’t ask for personal information from visitors – something that can act as a barrier on line. Companies such as Google use SSL to pass along certain information about what searchers are looking for – and are requiring this higher level of security to perform that service. This trend seems likely to continue, making SSL certificates vital to virtually any website – but especially those with e-commerce in mind.
One question when considering which security vendor can add the most value to your existing or newly established site is “how can I can demonstrate my trustworthiness to potential customers?” According to a survey carried out this year by the independent web research organisation Baymard Institute in conjunction with Google, the Norton Secured Seal is by far the most trusted, with 35.6% of the votes – nearly 13% ahead of its nearest rival. It was shown to be the seal that gave customers the strongest sense of trust when purchasing online, making it the de facto choice[6].
Such reassurance will play a major role, as the internet spreads it reach and e-commerce gathers ever greater momentum throughout MENA capturing and keeping customers is where success lies.
[2] http://www.kwintessential.co.uk/read-our-blog/ecommerce-opportunities-middle-east-and-north-africa.html