GCC e-commerce must overcome obstacles to become world player; report

Report claims consumers are wary, however market could quadruple to $20 billion by 2020 if the right set of enablers are put in place

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GCC e-commerce must overcome obstacles to become world player; report  Online payments also play a factor in holding back e-commerce growth in the region.
By  Aasha Bodhani Published  September 12, 2016

A report by A. T. Kearney, dubbed, "Getting in on the GCC E-commerce Game" has claimed the GCC region has the potential to become the world's fastest growing e-commerce playground.

The report reveals that high levels of disposal income, Internet and smartphone penetration, changing consumer preferences, companies are beginning to see the potential in the region and seize opportunities.

Compared to mature markets, the e-commerce market in the region is much smaller. With an estimated market size of $5.3bn in 2015, e-commerce contributes only about 0.4% to the region's GDP.

According to the report, there are several obstacles preventing e-commerce in the GCC region from reaching its potential, including consumer trust and awareness, gaps in payment systems, distribution and logistical infrastructure, government policies, data security and fraud.

Furthermore, e-commerce offerings are lacking in the retail sector. The report reveals, 34% of major GCC retailers have an e-commerce channel, yet there are significant opportunities to overcome these challenges and facilitate growth in the sector, with the study expecting, the market to quadruple its value to $20 billion by 2020 if the right set of enablers are put in place.

Laurent Viviez, Partner, A.T. Kearney said: "We expect the growth of e-commerce in the GCC to transform the future of businesses, economics and lives across the region - but only with the right set of enablers in place. And it doesn't rule out traditional retailers, who can be on the winning side of e-commerce by adopting an omni-channel approach. We see the future for the sector as not digital-only but ‘physical with digital' - traditional retailers can really tap into this."

Online payments also play a factor in holding back e-commerce growth in the region. Shoppers are wary, and as a result 60% of online orders are still paid in cash at the point of delivery.  

Adel Belcaid, Principal, A.T. Kearney, added: "This should be a focus area for retailers as they select best payment options to ensure transaction security as well as enjoyable customer experience.

"They need to form payment ecosystems to ensure interoperability, and forge strategic partnerships with the best-of-breed providers that are already active in this space and also enable mobile-based payments collaborating with telecom players and taking advantage of the region's high mobile penetration."

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