When you think of the Middle East, is the first image that springs to mind the glittering palaces of Saudi Arabia or the horrors of war? But have you ever thought about the huge traffic dividends and offshore opportunities lurking in this land? As the saying goes, "a hero comes out of troubled times". The Middle East is a region where both opportunities and challenges exist. This time, Facebook and Kantar Launched the White Paper on The Middle East Cross-border E-commerce Market. The first half of the white paper analyzes the Middle East market, the future development trend of e-commerce in the Middle East, and the role of social media in the development of e-commerce in the Middle East.
In the second half, the white paper highlights the importance of closed-loop learning for entering new markets in the Middle East, including market entry strategy development, measures to ensure success, and Ramadan marketing. Finally, this white paper presents partnership opportunities. Driven by the Belt and Road Initiative, Chinese e-commerce companies have taken advantage of the "Online Silk Road" to let global users see the high quality of "Made in China". The Middle East, a market for unlimited traffic dividends, should be the focus of attention.
Despite the short-term turmoil, markets in the Middle East remain extremely diverse and attractive
1.1 The Middle East market presents diversity
The Middle East consists of multiple markets with varying levels of economic prosperity, consumer demand, digital penetration, retail structure and market maturity, with the UAE, Qatar and Bahrain, for example, far more developed than Iran and Egypt. Second, markets in the Middle East will grow at different speeds and in different directions, with the UAE, Saudi Arabia, Turkey and Egypt among the more valuable markets.
From the perspective of consumer diversity, there are differences in the general situation of consumers in the Middle East, their views on shopping and e-commerce, and the aspects they pay attention to during shopping trips. Even within the same market, Middle Eastern consumers are diverse, with dubai's rich seeking experiential retail and blue-collar workers demanding practical shopping experiences. So a "one size fits all" strategy for brands is unlikely to succeed in the Middle East.
Therefore, the following points should be paid attention to by brands wishing to enter the Middle East market:
Think of the Middle East as a number of different markets
Brands must formulate specific strategies according to the consumer and retail development trends in each market, and avoid "one size fits all".
With the growth of consumer segmentation, brands need to pay attention to precision retail
Brands must be precise in producing products, setting prices, promoting products and developing marketing strategies
1.2 The Middle East is experiencing short-term turbulence
In recent years, due to economic, legislative, political and social turbulence, retail growth in the Middle East has slowed down, resulting in negative impacts on job creation, personal disposable income, business confidence and investment. The business impact of these disruptions on different categories of retail is different. For example, in the necessities category, consumers are pursuing more aggressive promotions. In the discretionary category, middle-income households have seen their spending decline.
Still, e-commerce companies need not lose heart. As a long-term investment, the Middle East remains a very attractive region for offshore e-commerce companies as the fundamentals of consumer demand remain strong. At the same time, several governments are actively seeking to support their economies through investment and legislative changes.
Whenever entering the Middle East, which contains diverse markets, it is important to choose the right and reasonable markets to invest in. The United Arab Emirates, Turkey, Saudi Arabia and Qatar offer the best investment opportunities for international brands, according to kantar Ratings.
Increased digital penetration is helping to win shoppers in the Middle East
2.1 Understand consumers in the Middle East
As the saying goes, "Knowing yourself and knowing your opponent is the only way to win every battle." Understanding new market consumers is the first step in marketing personnel's organizational plan. There are several facts to note: 1) The evolving shopping categories of middle Eastern consumers; 2) Consumers in the Middle East are heavy users of beauty products. The three main consumer trends emerging in the Middle East are: 1) consumers are more inclined to pursue value; 2) Consumers tend to pursue convenience; 3) Consumers are more inclined to pursue shopping experience.
2.2 Consumers in the Middle East are getting more and more digital
The Middle East has one of the highest digital penetration rates in the world, with mobile phones rapidly increasing the amount of time spent on digital products, and the region is dominated by young people with a large number of heavy users of digital products.
With the rapid development of technology and the Internet, mobile phones have increased the time consumers spend on digital products. Digitization has also changed the way consumers connect and interact with brands. For example, there are more shopping touch points for consumers, and digital platforms make it easier for consumers to search for products, learn about offers and respond to complaints.
But it's worth noting that the growing digital penetration of Middle Eastern consumers has yet to translate into high rates of digital (or e-commerce) purchases: according to Kantar Research, only 10 percent of consumers in the UNITED Arab Emirates have ever purchased online. The relatively low conversion rate may be due to the following factors: 1) lack of consumer protection laws; 2) Poor service; 3) Worry about data security.
2.3 From digital users to digital buyers
However, in certain categories (such as cosmetics, apparel and footwear), e-commerce has great potential. For example, while only 2% of shoppers currently purchase facial care products online, 79% say they are willing to do so.
2.4 Cash on delivery drives conversion rate
In the Middle East, Chinese ecommerce companies have the advantage of establishing exclusive supply chains because there are no barriers to cross-border logistics.
In the future, There will be great opportunities for Chinese e-commerce giants to stand out and be among the industry leaders in the Middle East. Localization will be the key to success and can be easily achieved by working with local partners.
2.5 Win shoppers in the Middle East
To win over middle Eastern shoppers, brands should pay attention to a few key points:
It was only a matter of time before shoppers gravitated to e-commerce, without worrying about market potential;
Digitization will be the key to brand awareness, customer connection and customer interaction.
Brands should focus on solving the obstacles consumers encounter in e-commerce;
Fashion, cosmetics and electronic accessories categories will move online more quickly.
Future trends of e-commerce in the Middle East
3.1 Sales channels in the Middle East are developing continuously
E-commerce merchants need to know that sales channels in the Middle East are developing to multi-channel and omni-channel, and different Middle East markets are at different stages of channel development. Emerging and developing markets, for example, are focused on a single channel. Markets such as Egypt, Kuwait, Saudi Arabia, Oman and Bahrain have now switched to multi-channel retailing. Currently, only the UAE and Qatar have omni-channel retailing.
3.2 E-commerce business opportunities continue to be scattered
First, given that most markets in the Middle East are not yet mature enough to develop digital retailing, new entrants should focus on high-growth and mature markets such as the UNITED Arab Emirates, Saudi Arabia and Turkey. Second, there is still room for new companies in major markets, with less than 40% of major markets dominated by the two largest companies. Finally, online sales vary by product category, with electronics, fashion and beauty leading the digital market.
3.3 Obstacles preventing e-commerce from achieving leapfrog development
Generally speaking, there are obstacles at every step of the supply chain, with trust in digital payments and last-mile pain points being the main ones. Unclear e-commerce regulations related to cross-border sales and the lack of a formal unified address system are important reasons for last-mile delivery difficulties. Despite the challenges, competition is increasing in all categories, such as increased investment activity by pure e-commerce retailers and e-commerce specialists.
3.4 Leveraging digital and e-commerce business opportunities
Having said so much about the importance of specific markets in the Middle East, the strategies e-commerce needs to focus on specific categories and market consumers include:
Enhance brand awareness in markets with low online retail penetration;
Shoppers in the region, many of whom are savvy shoppers, can be enticed to try new categories with exclusive promotions and a combination of shopping experiences and value;
Creating an Arabic website;
Leverage frequent shoppers as spokespeople, reward their loyalty and motivate them to promote.
At the same time, businesses need to think of digital channels not just as sales channels, but as marketing channels. Thirty percent of mobile consumers prefer to discover new products through video, and "influencers" are trusted advisers, especially in the beauty field.
