How Homegrown eCommerce, Tariff Reform Can Shape Jordan’s Digital Future

MENA, Jordan, eCommerce, startups

One of the ways that eCommerce has changed the retail landscape is that it has made it possible for brands and consumers from different corners of the globe to connect over the internet.

Thanks to online marketplaces and global logistics networks, digital shoppers now have the world at their fingertips, a phenomenon that has allowed eCommerce marketplaces like Amazon to grow into the global trade giants they are today.

But in Jordan, a combination of factors has meant that international eCommerce companies haven’t taken root in the country to the same extent they have in other markets in the Middle East and North Africa (MENA) region, such as the United Arab Emirates (UAE), Qatar or the Kingdom of Saudi Arabia (KSA).

In the KSA, for example, Amazon has pursued an ambitious expansion policy — and in addition to 12 operation sites, the retailer this year launched its Delivery Service Partner (DSP) program in the country. But as of today, there is no

As a result of this, Jordanians who want to buy things on Amazon are left with expensive delivery fees, slow international shipping times and the limited product range of Amazon International. Meanwhile, just over the border in Saudi Arabia, Amazon Prime subscribers get the benefit of free and same-day delivery options for thousands of products.

The same goes for Noon, Amazon’s biggest rival in MENA. As is often the case when businesses based in the UAE expand into the wider region, Noon grew first into Saudi Arabia but skipped straight over Jordan and targeted consumers in Egypt instead.

Read more: Is Amazon Looking to Take Out Noon in the Middle East?

Part of the reason that international businesses have overlooked Jordan is simply that its economy is dwarfed by those of Saudi Arabia and Egypt. In 2020, Jordan’s gross domestic product (GDP) was $43.7 billion, compared to $693.1 billion and $700.1 billion for the KSA and Egypt, respectively.

As well as being an overall smaller market, it also lacks the kinds of populous metropolitan areas of other countries.

Related: Egyptian eCommerce Platform Homzmart Raises $23M

With an absence of the kind of megacities that allow for urban logistics networks — like those that underpin the Amazon Prime delivery model — international eCommerce companies appear to have passed over Jordan in favor of other opportunities.

The good news for Jordan is that without the presence of the world’s biggest online retailers, a host of homegrown eCommerce businesses have sprung up to fill the gap in the market.

For example, local startup JoDealz has built an omnichannel eCommerce platform with both a website and an application to sell a variety of products, including fashion items. In an interview with Jordan News, company co-founder Abdalhady Al-Dweik hinted at another reason that international retailers have yet to foray into the Jordanian market: high trade tariffs and a complex customs system.

Tariffs and Customs Reforms

Considering the difficult regulatory environment for cross-border trade, many Jordanian and international retailers welcomed Prime Minister Bisher Al-Khasawneh’s announcement this year that the country will restructure customs tariffs to enhance the competitiveness of the national industries.

In January, Al-Khasawneh said that the new tariffs are “part of a comprehensive customs reform” that will also see the number of customs duty categories reduced from eleven to four, and decreased from as high as 40% to between zero and 25%.

During the announcement, the prime minister stressed the positive impact restructuring the customs tariffs will have on importers and consumers who will benefit from reduced costs and a more streamlined system.

Of course, it will take more than changes to the customs regime for Jordan’s eCommerce sector to truly thrive. The biggest boost for online retail in the country will come from consumers having more money to spend.

The Jordanian economy never really recovered from the 2008 recession. Since then, the Arab spring, the war in Syria, the COVID-19 pandemic and now the ongoing Russia-Ukraine war have all caused problems for the country. Unemployment in the nation remains high and the World Bank’s economic reform goals for Jordan were pushed back because of the pandemic.

Ultimately, government initiatives, local entrepreneurs and international businesses will all need to play a role in Jordan’s economic recovery.

See also: UAE’s ADQ Launches $100M Tech Fund in Jordan

In a promising sign for the country’s eCommerce and tech startups, in June, the Emirati sovereign wealth fund ADQ launched a $100 million fund to invest in Jordan’s technology sector and support the ongoing growth of its digital economy.

And earlier this year, a New Business Herald report relayed comments made by Central Bank of Jordan Governor Adel Al Sharkas around the likelihood of creating its own central bank digital currency (CBDC) that would be linked with the country’s national currency, the Jordanian dinar.

Read more: Jordan’s Central Bank Considering CBDC

Per the report, allowing cryptocurrency trading in the country could be a possibility “once the necessary legislation has been put in place.”

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