Only 15% of GCC businesses are online


e-commerce, e-trade, GCC
Percentage of internet users transacting online (Source: PAYFORT)


Internet revolution in the Arab world is a fact: dynamic young population of the region is adopting new technologies, and so online business, like business-to-consumer (B2C) e-commerce is growing fast. In 2004 there were only 28 million going online in the Arab World. By 2014 that number increased by more than 400 percent, while the number of devices connected to the Internet is expected to grow from 10 billion to 50 billion by 2020. Several new reports dedicated to e-commerce in Arab World are underlining robust growth and a huge potential for the industry, with estimated 4.43 million online buyers in the region.

According to the newest PayFort’s report, e-commerce is expected to grow from USD 9 billion in sales in 2012, to USD 15 billion in 2015, and a new report by PayPal reveals that last year’s online sales in the Middle East amounted to USD 11 billion. Robust growth is also predicted by’s “Middle East B2C E-Commerce Report 2014” which indicates that e-commerce in the region is prepared for a boom: growth rates of around 20 percent per year are expected for the next few years. Regional leaders for e-commerce are UAE, Saudi Arabia and Qatar, but still, B2C e-commerce presently accounts for less than one percent of total retail sales in the Middle East, and just two percent in GCC region.

PayPal’s report states that preferred products for online purchase in Middle East are travel-related on which online shoppers have spent USD 1.5 billion in 2012, followed by consumer electronics (USD 250 million), computers (USD 248 million), and jewelry and watches (USD 222 million). Almost seven out of 10 online shoppers claim the favorable prices are a reason to shop online, while 56 percent believe the ease of use is also a benefit.

Qatar – travel and sport equipment

e-commerce, e-trade,GCC
Credit card contribution to consumption 2008 – 2012 (Source: PAYFORT)

There is a huge growth potential in the regional e-commerce, industry reports say, as B2C e-commerce presently accounts for less than one percent of total retail sales in the Middle East, and just two percent in GCC region. Furthermore, only 15 percent of the region’s businesses have an online presence, and the majority of the online trade remains cross-border, while the intra MENA region represents 10 percent of e-trade. But the internet revolution is bound to change that sooner rather than later and e-commerce is expected to grow from USD 9 billion in sales in 2012, to USD 15 billion in 2015.

In Qatar, e-commerce is forecast to increase from USD 0.70 billion in 2012 to USD 1.25 billion in 2015. Travel and sport equipment have the highest proportion of online spend at 20 percent though travel tickets have the highest average online spend. The top online retail site visited was Qatar Airways, followed by eBay, Amazon, and

UAE is the regional leader with around 3.6 million e-commerce costumers, where 71 percent of all purchases made in the country are researched online first. E-Commerce is growing in the UAE at a rate of over 20 percent annually, and is expected to grow to USD 5.10 billion in 2015, while in Saudi Arabia e-commerce is projected to increase from USD 1.00 billion in 2012 to USD 2.70 billion in 2015.

In Bahrain, according to, B2C e-commerce accounts for over five percent of total retail sales, as almost 90 percent of the population is Internet connected and five percent of users shop online, while in Oman, e-commerce is at a very early stage of development. Online consumption growth is supported by the acceleration of m-commerce: in GCC, a person on average owns 2.9 smartphones.

UAE and KSA are, as stated in PayFort report, the number one and three smartphone penetration nations in the world. PayFort predicts that regional m-commerce is expected to increase from USD 0.9 billion in sales in 2012 to USD 3 billion in 2015. M-commerce is accounted for 10 percent of all B2C e-commerce in the region in 2012, with this share expected to double by 2015. In Qatar, m-commerce is forecast to increase from USD 0.10 billion to over USD 0.45 billion in the same period, driven by a rise in sales through smartphones, while for KSA PayPal predicts m-commerce rise to over USD 0.70 billion by 2015. From its current base supported by high smartphone penetration, m-commerce in UAE is predicted to grow to nearly USD 1.50 billion by 2015.

SMEs distrustful of e-commerce 

Motivation for shopping online. (Source: PAYFORT)
Motivation for shopping online. (Source: PAYFORT)

Still, retailers in the Middle East are at the early stages of their online penetration. According to PayForth, just 15 percent of the region’s businesses have an online presence, and PayPal’s report reveals that the majority of the online trade remains cross-border, distributed among the US (35 percent), Asia (30 percent) and Europe (25 percent), while the intra MENA region represents 10 percent of e-trade.

Challenges in the sector abound, beginning with logistics. Most online shopping websites in the Middle East do not deliver order on time, due to lack of reliable shipping companies, while, according to some reports, companies like Aramex and DHL don’t have strong operation systems, resulting in shipping problems for e-commerce websites. Another challenge is online payment adoption: recent surveys in the Gulf area indicated “fraud” related to card payment as one of the main barriers for e-commerce growth.

Cash-on-delivery payments still dominate, constituting 80 per cent of internet purchases, but this is starting to change and card issuance in the region is growing by 40 per cent each year. “Technology, Media & Telecommunications Predictions 2014 Middle East” report by Deloitte states that SMEs, compared to larger businesses and their consumers, are lagging behind in terms of their online web presence. For example, says Deloitte report, in Qatar SMEs are reluctant to adopt e-commerce as they do not trust it as a viable platform. Also, surveys show over 55 percent of SMEs has no presence on social media and 69 percent do not make use of social media advertising. This is a huge gap, especially as Qatar has one of the highest internet penetration rates in the world and the highest in the Middle East, underlines Deloitte.

(Source: PAYFORT)
(Source: PAYFORT)

One of the problems for e-commerce is security: according to Deloitte, the Middle East is the most popular region in the world for cyber attacks, with a recent report from Symantec highlighting a growing trend in attacks on SMEs. Last year alone, Symantec cited a 42 percent increase in targeted attacks on the region’s enterprises, 31 percent of which were aimed at SMEs.

There is also fear that e-commerce will replace traditional stores, but according to experts, that will not happen any time soon. In fact, having an online store helps retailers secure additional revenues, because online shoppers tend to be more loyal than that in-store, and they spend more. For example, in China, over 50 percent of all online purchases are additional revenue for retailers and brands, according to Kantar Worldpanel, UK-based market research group.



three × 2 =