Retailers across the region both in the virtual and actual worlds are seeing margins suffer as the economy tightens but digital commerce looks set to grow.
Last year was a breakout year for the big online players such as Careem, the taxi hailing app, and Souq.com, the region’s biggest online market place.
The rush to the digital sphere has seen the number of registered sellers on the Jadopado online market place platform jump by 84.6 per cent in 2016. It now has over 9,000 traders selling products, the majority from the UAE, closely followed by Saudi Arabia, India, Pakistan, Egypt and the UK. This boom in third-party sellers is global with Amazon, the world’s biggest retailer, announcing last week that it shipped 50 per cent more items during the past holiday season than the prior year for third-party vendors.
The US$625 million Careem and Souq received in investment stirred the local digital pot, with many seeing the potential. However, the softening economic climate and governmental fiscal tightening affected offline and online commerce. In Saudi Arabia a royal decree in September said ministers’ salaries would be reduced by 20 per cent, and housing and car allowances for members of the advisory Shura Council cut by 15 per cent.
“We definitely noticed a downturn just after September when the Saudi government changed the public sector salaries,” said Omar Kassim, the founder of Jadopado. “This year will be interesting for retail because there is growth but it is a lot slower than previous years. Big retail groups like Al Tayer have moved into the online sphere with their luxury online portal and corporate groups like PepsiCo have seen digital as more than a box ticking exercise. This is a solid fundamental shift.”
The UAE is seeing new online platforms being launched regularly. “We only launched souqplace.com in February and it took some months to gain trust,” said Tony Al Saiegh, the executive director at Virtual Dusk-Souqplace.com. “We now have 250 different vendors and over 1,500 views per day. The views can swell to over 3,000 with a promotion but we have started to gain traction as customers begin to trust the site. We only supply the UAE but I see us having at least 1,000 vendors by this time next year.”
ascott@thenational.ae
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