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Amazon’s Middle East eCom Marketplace To Compete With Souq

Amazon to Expand Into Middle East

Amazon’s next big bid for expansion will be in the Middle East, according to a report from CNBC.

The online giant has apparently been contacting North American third-party sellers recently, and telling them about an opportunity to interact with new customers in the United Arab Emirates (UAE) and Saudi Arabia.

The news comes about two years after Amazon bought Souq.com for $580 million, and the company is telling sellers not to sell on Souq because it will have the same inventory on Amazon.

“Following Amazon’s acquisition of Souq, I want to offer you participation in a groundbreaking new sales project in the Mideast,” Amazon wrote to sellers. “Our program is simple, straightforward and allows you to expand your selection to a new base of Amazon buyers.”

The sellers asked CNBC not to identify them because the talks with Amazon were private, and Amazon didn’t respond to the news organization when it asked for a comment.

Right now, Japan, Germany and the U.K. make up most of Amazon’s international revenue. The eCommerce retailer has struggled in India and China because of competition from sites like Alibaba and recently enacted local laws in India, which limited its ability to do business.

Amazon continuously loses money every quarter when U.S. and Canadian markets are excluded from consideration.

Some of the products that Amazon wants to push in the region are perfume and electronics. The site would look like Amazon’s other international sites, and would feature access to the company’s shipping service, Fulfillment by Amazon (FBA). The commission rate for FBA will be 3 percent, which is lower than Amazon’s North American rate.

The market could potentially be extremely profitable for Amazon, because there are a lot of millionaires in the region and a lot of business transactions are already done in English. However, Saudi Arabia’s reliance on oil could pose future problems, as oil prices could fluctuate.

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