By Chanel Smith EMEA Editor (@PYMNTS_EMEA)
Online shopping in the Middle East is finally thriving with significant help coming from certain drivers in the market.
There were over 30 million consumers shopping online in the Middle East in 2012, which was a 65 percent jump from figures in 2011. By 2015 Middle East online commerce is predicted to grow from $9 billion to $15 billion. But, this will be no easy feat, as eRetailers are still struggling to convince consumers to convert to the online space. A new study by PayPal brings three Middle Eastern countries to light—namely the Kingdom of Saudi Arabia, Qatar and the U.A.E.—and identifies them as the region’s three most prominent drivers in eCommerce.
PYMNTS.com takes a deep dive into these regions to find out which online trends are driving growth in these countries, and how consumers prefer to pay for online transactions.
ECommerce In Saudi Arabia
Trends: Mobile commerce is quickly progressing in Saudi Arabia, and according to PayPal, one in every 10 shoppers reported the potential to buy on mobile devices. Professionals with higher incomes reportedly had the greatest potential to spend more on mobiles—more specifically Arab expats in their mid-20s and mid-30s, and Arabs living in the city of Riyadh.
What Are Saudis Buying: Saudi Arabia has the highest market share in online travel (59 percent), as well as travel as the highest average in annual online spending per person ($478/ SAR 1,793). Computer purchases in Saudi were reported as the second highest average annual online spending category ($172/SAR 646).
Souq.com, a U.A.E.-based eCommerce site, is the top visited retailer in Saudi, and its average expenditure is $501/ SAR 18,882. Furthermore, 46 percent of online shoppers in Saudi said they made purchases from overseas websites, and explained they did so because they were unable to find the product in their country.
PayPal reveals that the share for most online categories, except travel, will grow by the end of 2013.
How Do Saudis Shop: Cash on Delivery (COD) is the most popular form of payment in the Middle East, as it accounts for more than 80 percent of online purchases. Card payments came in second place with 15 percent, followed by PayPal at 5 percent. Consumers shopping on smartphones indicated that they prefer COD (31 percent), while 36 percent of tablet users said the same.
In regards to domestic eRetailers in Saudi Arabia, COD also dominates online payments, at 70 percent. Again, credit card payments were the second highest option (15 percent), followed by auto-debit (Sadad) (10 percent), and finally PayPal (5 percent).
When it came to overseas purchases, credit cards (44 percent) and PayPal (33 percent) were the most preferred payment options.
Ecommerce in Qatar
Trends: Twenty-eight percent of participants said they made an online purchase in the last year. Consumers in Qatar are growing more comfortable with online shopping across several different categories, but especially in travel. At present, the report shows travel has a 34 percent share in the online market, and an average annual spend of $674/ QAR 2,475.
Travel and sports equipment are the two reigning categories for online sales in Qatar. The most popular retail website visited in the country is Qatar Airways, with 37 percent of online consumers reported to have made a purchase. EBay was the second highest visited site, and Amazon was the third highest.
What Are Qataris Buying: According to PayPal, desktop computers are the preferred technology when it comes to online shopping. In Qatar, there is an average of 86.8 percent of total purchases made on desktops, compared to smartphones (10.2 percent) and tablets (3.2 percent).
The report indicates Qatari consumers have the propensity to do their online shopping while at work or at home. Results show that desktop and smartphone shoppers are generally expats who are in their mid-20s and early 30s, and are living in the city of Doha. Conversely, tablet shoppers are predominantly Arab consumers who live in large households with children. Moreover, the high-income segment has the highest potential for online spending. This is especially true for expats in their mid-20s and mid-30s who live in either Doha or the Al Rayyan region.
How Do Qataris Shop: Once again, COD is the most common method of payment in Qatar as the report shows COD is accountable for 75 percent of transactions. Credit cards payments are still growing in Qatar, with 18 percent of consumers using them, and PayPal accounted for 7 percent of online transactions.
Over 50 percent of respondents said they have bought online through an overseas retailer, and consumers who live in large households with children still at home revealed they are more likely to use PayPal for such cross-border purchases.
ECommerce in the United Arab Emirates
Trends: High-income consumers in the U.A.E.—including both management and professional people—were reported to be most likely to spend more money online. This is especially true for expats in the country, such as Asian and Western consumers. Additionally, the high-income consumers include those in their mid-20s and early 30s, and those who live in the city of Dubai.
What Are Emiratis Buying: Travel, again, reported the highest online share with 67 percent market share. Travel also has the highest average annual online spend at $551/ AED 2,024. Computer purchases had the second highest average annual online spend at $136/AED 500.
Fifty-two percent of U.A.E. consumers said they shop at Souq.com, which also had the second highest local store average expenditure of $268/ AED 987 per online transaction.
How Do Emiratis Shop: It comes as no surprise that COD is still the most preferred payments option in the U.A.E., especially by online consumers using mobile technology to shop. Credit Cards were the second most preferred payment method, and PayPal was the third most used at 30 percent.
To read the full report at PayPal click here.
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