Digital commerce essential in Middle East: Gartner
Gartner identifies three major requirements for businesses to grow digital commerce presence
At Gartner's Symposium, analysts identified delivery, payment and customer service to be what digital commerce players should focus on to grow their businesses in the Middle East.
According to Gartner, only 15% of businesses in the region have an online presence, 10% of the digital commerce transactions are between local residents and businesses in the region, and 90% of online purchases are bought from outside of the Middle East.
"More than half of the population in the Middle East have Internet access, while only less than 20% are online shoppers. The region has a lot of growth potential," said Gene Alvarez, managing vice president at Gartner. "With a GDP per capita among the highest in the world, a young population, and encouraging government initiatives, the Middle East will see strong growth for digital commerce in coming years."
Gartner stated delivery is the number one challenge in the region, as it is not always reliable and some places are without an address system. Furthermore, in countries like Saudi Arabia, women are unable to drive and may not open doors to male deliverers. Gartner advises digital commerce providers to invest heavily to build logistics or consider the option of in-store collections.
According to Gartner about 80% of online shopping in the Middle East is done by cash-on-delivery, because of this payment is another key identifier. Currently, cash transactions are less efficient as it takes a longer time to complete the delivery and tends to have a higher return rate. Digital commerce providers should consider online banking, mobile wallet, cash vouchers, and virtual credit cards, said Gartner.
The third is customer service, as offering online help, call centres and the ability to track orders and shipping will boost customer loyalty and encourage more online orders.
Gartner's Alvarez added: "A number of companies are investing in digital commerce, trying to become the Amazon of the Middle East, yet many companies have not looked into the digital channel very seriously. There are not enough digital commerce offerings in the Middle East, leading to low customer adoption, and most purchases are bought from businesses located outside the region."
Governments in the region have been offering online services for traffic charges, utilities payments and public services, giving quick and easy access to citizens and getting people familiarised with digital transactions. The UAE government has even set up a duty-free e-commerce hub "mahajircom", offering companies' technology platforms, payment gateways and logistics services, supported by preferential business and tax policies.