According to a report by Wamda and the Massachusetts Institute of Technology, the total value of the Middle East e-commerce market will reach 30 billion U.S. dollars in 2021, which is expected to increase by more than one-third. By the end of 2020, the e-commerce market in the region is worth 22 billion U.S. dollars; thanks to active online shopping consumers in Saudi Arabia, Egypt, and the UAE, these three countries account for 80% of the entire e-commerce market in the region.
In Saudi Arabia, the market size is expected to reach US$8.2 billion by 2024. Although the UAE currently has the largest market size, the Saudi e-commerce market is growing at a faster rate.
Before the epidemic, the UAE’s digital economy contributed 4.3% of the country’s gross domestic product (GDP). In addition, according to data from the Dubai Future Foundation, by 2023, the country’s e-commerce industry will reach 62.8 billion U.S. dollars. Although it is natural that these three countries (because these are the main populous countries in the Middle East) have a large share of the e-commerce market in the region, this increase is also attributed to the large-scale infrastructure improvements in recent years. Investment increases, and more and more countries support the regulation of e-commerce.
From 2016 to 2019, about 665 million U.S. dollars were invested in e-commerce, which accounted for almost 20% of the total investment of start-ups during the same period. As early as 2017, the Dubai Airport Free Zone Authority launched an US$870 million “commercial” project-a free trade zone fully dedicated to e-commerce. Government regulators have also seen the potential of the market.
In 2019, Saudi Arabia passed the e-commerce law, which aims to protect consumers from fraudulent transactions, increase consumer confidence and stimulate the market.
Amazon.com, the leading global e-commerce platform, achieved US$88.9 billion in revenue in the second quarter of 2020, and net sales increased by 40% year-on-year.
It is said that Saudi Arabia, the UAE, and Egypt have the highest penetration rates in the e-commerce market. In the UAE and Saudi Arabia, the e-commerce market was estimated to be US$7.5 billion before the virus lockdown. By the end of March 2020, it will grow to 11 billion U.S. dollars in these two countries alone.
Iyad Kamal, former chief operating officer of Aramex, said: “Global companies will re-evaluate their supply chains and strive to have multiple fulfillment centers around the world. As consumers increasingly use e-commerce platforms, the business has grown by 31%. Especially in the three countries of the UAE, Kuwait, and Saudi Arabia. As the region gets rid of the lasting impact of the epidemic, the opportunities in the e-commerce sector are becoming more and more obvious.”