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Sunday, Nov 13, 2016
Dubai:The Gulf Cooperation Council (GCC) has the potential to become the world’s fastest growing e-commerce playground, according to A.T. Kearney’s latest report.
Currently, the e-commerce market in the region is much smaller compared to mature markets with similar economic fundamentals. With an estimated market size of $5.3 billion (Dh19.4 billion) in 2015, e-commerce contributes only about 0.4 per cent to the region’s GDP — a minuscule amount which is 4-8 times lower than other comparable markets.
According to the ‘Getting in on the GCC e-commerce Game’ report, the GCC is one of the most underpenetrated e-commerce markets in the world. However, with high levels of disposal income, world-leading internet and smartphone penetration, and changing consumer preferences, there is robust potential in the region, and some companies are beginning to seize the opportunities.
The report said there are several obstacles preventing e-commerce in the GCC region from reaching its potential, including consumer trust and awareness, gaps in payment systems, distribution and logistical infrastructure, government policies, data security and fraud. Furthermore, e-commerce offerings from the retailer side are also lacking. The study reveals that 34 per cent of major GCC retailers have an e-commerce channel, compared to 58 per cent in the US.
However, there are significant opportunities to overcome these challenges and facilitate growth in the sector, with the study expecting, the market to quadruple its value to $20 billion by 2020.
“We expect the growth of e-commerce in the GCC to transform the future of businesses, economics and lives across the region — but only with the right set of enablers in place. And it doesn’t rule out traditional retailers, who can be on the winning side of e-commerce by adopting an omnichannel approach,” said Laurent Viviez, Partner at A.T. Kearney.
“We see the future for the sector as not digital-only but ‘physical with digital’ — traditional retailers can really tap into this,” he said.
The report states that online payments and wary shoppers are among the biggest factors holding back e-commerce growth in GCC. As a result of these factors, 60 per cent of online orders are still paid in cash at the point of delivery. Cash on delivery is not only expensive for retailers as they bear transaction and cash transportation risks, but also affects negatively impacts cash flow.
Staff Report
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