Analysis of E-Commerce in Middle East & North Africa - Part 1

Introduction

Fig 1: Insights MENA photo, a website which specializes in studying internet consumption in MENA region. Source: http://www.insightsmena.com/ en/   

Internet and the digital world have become an integral part of daily life for a large number of people across the globe. For many, a considerable amount of time daily spends on the web. The digital world is also making strong inroads in the commercial space. According to a survey conducted by “Neilson”, 875 million individuals have purchased online, at least once a year. According to “world internet statistics”, as on 2011, Middle East constitutes only 3.4 percentages of the global users and hence does not contribute much on the e-commerce front. (If North African countries be included, the percentage will go a bit higher). Even though it does not play a very big role so far, e-commerce seems to have a great potential in the near future. The future growth could be fuelled by-high economic growth, young demographics, investments in the ICT infrastructure and political transition. Keeping this in mind, “Management Guru Blog”, will do a comprehensive analysis of the overall e-commerce industry in the MENA region. The entire report will be produced in a series, delving into the various aspects of e-commerce in the region. The very first in the series, will a give a brief description of the internet consumption as well as e-commerce activities in the region.        

E-commerce Statistics for Middle East & North Africa (mena)

Table 1: shows the GNI per capita and internet penetration in some selected MENA countries. Source: World Bank.

                    Table 2: Shows, mobile internet usage, in terms of percentage. Source: Insights MENA

Fig 1: shows the average weekly internet consumption by internet users (non internet users are not included in this), in minutes for the entire MENA region as well as for selected economies. The total internet consumption is the sum total of average weekly access via laptop/desktop and mobile. Source: Insights MENA

Fig 2: shows the percentages of online research and purchases made, across the overall population (includes internet users as well as non users), for MENA region and some selected economies. Source: Insights MENA. 

Fig 3: shows the percentage of internet users, who always pay attention to online ads while surfing the web, for MENA as well as other individual economies. Source: MENA Insights.

Table 3: shows the average weekly frequency, of some selected online activities, for internet users of MENA region and some individual economies of the region. Source: Insights MENA

Analysis

Some of the key findings of the statistics are as follows:

·         High per capita income influences high e-commerce activities: Countries like UAE and Saudi Arabia have fared well than their other Arab counterparts, on account of high per capita income. High per capita income results in high penetration of- internet, internet enabled better quality handsets, credit cards etc. This eventually has resulted in high percentages of E-commerce research and purchase activities, in these countries.

·         Unique case of Saudi Arabia: Saudi Arabia, the largest MENA economy, enjoys a comparatively high internet penetration and internet enabled mobile usage of, 41 and 54, percentages respectively. It has a very high online research percentage of 18 and  42 percentages of internet users claim to always pay attention to online advertisements. In spite of having strong arsenals, the overall percentages of e-commerce stands at moderate five percentages, just one percentage point higher than the overall MENA average of four. It seems, cash based culture and low reliance on credit cards, coupled with under performance in the 45 plus segment, has deterred Saudi Arabia from realizing its full e-commerce potential.

·         Jordan has huge e-commerce potential: Jordan offers another good case to study. Unlike gulf countries, it does not have any natural oil resources of its own and according to “World Bank” is considered as a developing nation with moderate per capita GNI of US $ 5,790. But, the tiny Levant state is also among one of the most innovative Middle Eastern countries and in the recent years have taken strides in the areas of, innovation and technology adoption. It enjoys decent; internet penetration, average weekly internet consumption and outlook towards e-commerce. A close look to some of the online activities of an average Jordanian internet user provides lot of interesting insights. An average user clicks an online ad, some 5.93 times a week and spends considerable time in research also. But when it comes to buying a product online, seems he hardly engages himself.  It might be due to the same factors preventing other countries as well- cash based culture, low credit card penetration and apprehension of using the internet for making payments. Jordan can be considered as one of the huge potential market for e-commerce in the region. With higher credit card/debit card penetration and education campaigns, higher e-commerce percentages could be realized in near future.