GCC internet shoppers spend US$685 million in 2004

Total B2C e-commerce (business to consumer), particularly the e-shopping segment in the Gulf is set to cross the US$1 billion mark by 2008 with a compound average growth of 22% over the five-year period from US$685 million this year according to the Madar Research Group.

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By  Maddy Reddy Published  November 29, 2004

Total B2C e-commerce (business to consumer), particularly the e-shopping segment in the GCC is set to witness a boom over the next few years, crossing the US$1 billion mark by the year 2008, with Saudi Arabia and the UAE leading the way according to a report released by Madar Research Group. Of the total B2C e-commerce transactions, more than one-third would be cornered by online bookings for airlines and hotels. The other popular categories for online shopping were books, clothing, gifts, flowers, electronic products including music CDs and DVDs, computer software and hardware, The forecast of rapid growth in internet shopping is based on the rising rate of internet penetration in the GCC. There were 4.7 million Internet users in GCC countries in 2003, showing 50% over the previous year. Although average internet penetration in the region was just 13% in 2003, there are indications of further dramatic growth in the short term. Globally, B2C e-commerce has seen remarkable growth, despite the setbacks suffered by a few players during the dotcom bust in the late 90's. Independent studies estimate that the global B2C e-commerce market would be worth more than US$428 billion by the end of 2004. The Dubai-based Madar Group reports several trends that indicate strong growth for B2C segment. Most companies in the GCC have started building virtual showrooms where customers can login to the company website, browse through the products and services and make their purchase online. In the UAE alone, there are over 30 companies offering B2C platforms. With a compound average growth of 22% over the five-year period, the highest growth is expected to take place in Kuwait (30%), followed by Qatar (25%). The study further shows that online bookings for airlines and hotels made up 34% of the total B2C e-commerce transactions in the GCC in 2003. By the end of 2008, the share of travel and hotel sector is projected to be 37% of total B2C e-commerce market. This is because inter-GCC tourism is the fastest growing segment in the region’s tourism industry. B2C e-commerce refers to all forms of retail commercial transactions occurring over an open network, which include online selling of goods and services directly to consumers. The e-shopping market segment of B2C commerce was the focus of the Madar study, as it is the most popular form of retail e-commerce carried out on the internet in the GCC.

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