Covid-19 and the coming of age of e-commerce in the MENA region

As Covid-19 continues to upend social norms and business models around the globe, the virus has forced different regions and sectors to adapt to a changing way of life.  In the second of a series of blogs, we look at how changes in consumer behaviour are impacting the retail sector in the MENA region.

We’re all familiar with images of locals and tourists bartering with stall holders in crowded souks and markets across the Middle East. However, since the rapid rise of internet usage (at the end of March 2020,  70% of the population in the Middle East were active online), the increasing popularity of social media and the ease of online shopping, traditional modes of shopping are in decline. The Covid-19 pandemic has only accelerated this trend and now, more than ever, there is an increasing reliance on e-commerce.

Smaller shops in the Middle East were arguably better prepared to adapt, given their pre-existing willingness to deliver and take payments on account, but even so retailers have had to scramble to innovate – introducing cashless payments, extending delivery options and moving increasingly online.  UAE-based Lulu Group, which owns many malls and shops in the UAE, has reportedly suffered an almost 50% slump in sales due to the restrictions prohibiting people to leave their homes. Lulu Group chairman Yusuff Ali Musaliam Veettil Abdulkadir has stressed the importance of concentrating on e-commerce for the future. And Lulu Group is not alone in this approach.

Jordan, a market where e-commerce was relatively slow to take off, has recently taken the opportunity to showcase its young and up-and-coming startups such as Basket.jo. Basket.jo is an online grocery app operated by Arab Yasmeen For Electronic Marketing. Established in 2013, Basket.jo has become increasingly popular in a country that imposed one of the strictest lockdowns in the region.  Adopting an Uber-like model, the app allocates customers their own personal shopper who then gathers items from the customer’s chosen supermarket, such as Carrefour (owned by Majid Al Futtaim HyperMarkets).

The UAE’s online shopping scene has also flourished over the last few years.  The arrival of e-commerce giant Amazon in the region in 2017 with the acquisition of Souk.com, immediately made the online retail market more competitive.  Early Bird Catering Services LLC (commonly known as Early Bird LLC, or earlybird.com), has been operating for almost 14 years and was one of the first online grocery stores in the country. Tapping into another growing trend, the company has a zero-waste policy where they encourage customers to return glass bottles for sanitation and reuse.  Since the pandemic restriction measures were announced, e-commerce sites, such as Early Bird, have experienced a 60% increase in demand.

To facilitate cashless payments for their customers, large UAE based e-commerce giant Noon.com entered a partnership with Visa Middle East FZ LLC (Visa Mena).  Noon.com also signed up with one of the largest malls in the country, The Dubai Mall LLC, and now offers online sales for more than 1,300 stores who had to shut due to the virus.

It is too early tell whether the balance will swing back to more traditional modes of shopping, once Covid-19 recedes.  However we may look back at 2020 as a time when e-commerce in the MENA region finally came of age.

Additional reading: Effective collaboration: the UAE’s response to the Covid-19 crisis