Is COVID-19-driven shift in MENA consumer behavior here to stay?

In the GCC alone, e-commerce grew from $5bln in 2015 to about $24bln in 2020

  
Online shopping woman used computer laptop searching shop on e-commerce website and using smartphone to payment on digital payment online gateway by credit card. Image used for illustrative purpose.

Online shopping woman used computer laptop searching shop on e-commerce website and using smartphone to payment on digital payment online gateway by credit card. Image used for illustrative purpose.

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CAIRO: Businesses of all sizes may have been hit by pandemic lockdowns, but online shopping platforms have witnessed unprecedented growth in the region, with e-commerce growing from $5 billion in 2015 to about $24 billion in 2020 in the GCC alone, according to a Middle East report by global management consultancy Kearney.

“People who used to go to stores and supermarkets moved to buying from apps. They now see the convenience and experience the ease of online shopping,” said Fahim Al-Zubaidi, CEO and co-founder of Akshaak, an e-commerce platform aimed at home-based businesses and individual projects.

While this shift in behavior may have been heightened during lockdowns, Al-Zubaidi believes it is here to stay.

“People will not stop going to shopping malls, but some of the products, particularly groceries and electronics, will move from shops to e-commerce platforms,” he said.

Another person who expects this shift in consumer behavior to persist long after the pandemic ends is Mahdi Al-Olabi, founder and CEO of R2S, a tech company that provides logistic solutions for e-commerce firms in Egypt.

“During the months of the lockdown, we experienced a huge spike in business, about 40 percent to 60 percent increase in deliveries,” he said.

“We’ve seen a shift in consumer culture, particularly when it comes to buying electronics, grooming products and workout equipment. While the buying calmed down a bit after lockdown, there has been a significant consumer culture change to the concept of shopping online. I don’t think that is ever going to go away.”

These predictions seem to be in line with projected e-commerce growth trends in the Middle East. According to the Kearney Middle East report, MENA e-commerce is estimated to reach $50 billion by 2025.

However, the shift in consumer habits is not the only change the region is experiencing. E-commerce growth has also accelerated the use of digital payments. The Middle East, traditionally dominated by cash transactions, now has more online shoppers preferring to use digital payments, according to a study from London-based Checkout.com.

The report reveals that 53 percent of the region’s consumers now most often use digital payments for their online purchases. Al-Olabi anticipates an even brighter future for e-commerce if this trend continues.

“Once people become comfortable using digital payments, it will be reflected in the growth of e-commerce,” he said. “They’re directly correlated. The more a country moves toward becoming a digital society, the more people will be apt to use e-commerce.”

Lydia Schoonderbeek, founder of Egypt-based beauty products e-tailer Source Beauty, said that although cash on delivery is still the preferred payment method for her customers, she sees an uptick in credit card transactions.

“Cash on delivery makes up 80 percent of our payments, but credit cards are slowly coming into the spectrum,” she said. “In one particular month, it was up to about 30 percent. People are starting to feel more confident not dealing with cash.”

While e-commerce may be growing in the region, the industry still has some catching up to do. According to Schoonderbeek, online payment systems need to be more user-friendly.

“Sometimes you’re asked to put an OTP code, and if you get preoccupied with something and don’t put the code in on time, you have to start the whole shopping experience again. The likelihood of you abandoning that whole experience is high. This needs to be fine-tuned.”

Providing the option to pay in instalments is another feature that should be made available to online shoppers, Schoonderbeek says. “People are price-sensitive; they should have the option of paying in instalments. This is not here yet, maybe because e-commerce in Egypt is still very much in its infancy.”

Meanwhile, Al-Zubaidi is concerned that the rapid growth of e-commerce in the region will affect service quality.

“With an increased number of e-commerce sites, we will have an issue with quality. Now everyone wants to open an e-commerce site. They think they will be successful, but they’re just copying other e-commerce startups. If they don’t have the right strategy, they will close down.”

However, he is optimistic about the future, adding: “It will take time, but the market will clean itself.”

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