GCC B2C e-Commerce Overview 2011

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Executive Summary

This study was commissioned by Visa Middle East and prepared by IMRG International to report on trends, data and forecasts concerning B2C e-commerce in the Arabian Peninsula. The study focuses in particular to the member countries of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

Total B2C e-commerce sales in 2010 in the region are estimated to have grown to around $3.3 billion. United Arab Emirates takes the biggest share: an estimated $1.9 billion or around 60%, followed by the Saudi Arabia ($520 million), Qatar ($375 million), Kuwait ($280 million), Bahrain ($175 million) and Oman ($70 million).

Online shopping in the GCC region is still in the early stages, but IMRG is convinced that the future is bright. e-Commerce is facing the same barriers we see around the world: lack of trust, payment security, delivery options, relatively high costs and the like.

However several signs point to a rapid growth in online shopping in the area.

First, the initiatives taken in all countries with respect to getting businesses online, eshopping, delivery and payment options and e-government which will increase the services available and contribute to creating a secure environment.

We mention in particular here:

The Dubai e-government initiative, which is amongst others, a key driver of online payment adoption in the UAE, creating the ePay gateway to enable customers to settle the fees of egovernment services on 24/7 basis in a secure environment.

The recently announced plans of Google “Getting Saudi Businesses Online”, similar to Google schemes elsewhere in the World, such as “Getting British Business Online” in order to helpsmall businesses to get online.

The REDe solution of Aramex, the global provider of comprehensive logistics and transportation solutions. enabling businesses to sell online, offering the MartJack platform to build an online store, and manage orders and payments, securely integrated with Aramex’s delivery solutions and services.

Retailers are investing in the region and are set to offer a multi-channel shopping facility, a combination of brick-and-mortar shops and online purchasing. The population of the GCC region is a very young and highly educated population compared to other parts of the world: the median age is around 28, considerably younger than for instance Europe (38), USA (35) and Japan (45). This young population will be more open to embrace internet and the (new) digital devices and media available: tablets, iPads, smart phones, social networks, online news and e-shopping.

All the private and government initiatives, plans as well as the trends we indicate, together with a growing economy and high disposable incomes, will strongly increase the further penetration and usage of the Internet and consequently enable and further online shopping. Therefore IMRG International predicts that B2C e-commerce sales will almost triple in the coming years with a year-on-year growth of around 30% and reach close to $15 billion in 2015.

This report contains two parts: a general overview followed by country profiles of the six GCC countries (see the table of contents). We have added two annexes: Annex A which contains an overall comparison of the six countries and a total for the GCC region and Annex B containing definitions of the terms used (such as B2C e-commerce) and index rankings used.

This study could not have been realised without consulting a great many sources in the region. We have done our utmost to carefully study the available data, making the necessary and hopefully right choices in which information to focus upon and which conclusions to draw. We fully agree with the conclusions of a survey by Madar Research and Orient Planet that for instance population estimates used by international authorities such as the UN and the World Bank often differ widely resulting in distorted socio-economic indicators such as per capita Online shopping in the GCC region has great potential and will certainly grow as we explained above.

It is therefore equally important that more becomes known about all aspects of online shopping in terms of data, impact of the internet economy, consumer behaviour and attitude in order to demonstrate the business opportunities for international investors but also initiatives to set up domestic sites. This will not only increase the available offer but will at the same time inspire trust and confidence among consumers.