- Service to be launched in UAE and Saudi in the second half of the year
- Agreement follows acquisition of Souq by Amazon last year
LONDON: Saudis will soon be able to buy goods directly from eBay and get them delivered to their doorstep.
It follows a deal between the e-commerce giant and regional shopping platform noon.com, the online platform backed by Emaar chairman Mohamed Alabbar and Saudi Arabia’s Public Investment Fund.
The agreement represents a major milestone for noon as it competes with Amazon-owned Souq for supremacy in the Gulf region’s fast growing e-commerce market.
“With this (agreement), we are offering our customers access to products that are not otherwise readily available in the region,” said Alabbar in a statement.
“Our partnership with eBay opens a whole new world of shopping experience.”
The new facility will be launched in the UAE and Saudi Arabia in the second half of the year via a standalone app.
Noon and eBay will share best practices and explore joint marketing opportunities as part of the agreement, noon said.
The partnership with noon follows the acquisition of regional rival Souq by Amazon last year for $580 million.
Amazon rolled out its Amazon Global Store in December for customers in the UAE, offering more than a million products including home goods, watches and shoes.
Amazon has been scaling up its presence in the region in the past months, advertising for several jobs in Riyadh following a meeting in April between CEO Jeff Bezos and Saudi Crown Prince Mohammed bin Salman in April, Bloomberg reported.
Mohamed Alabbar unveiled noon in November 2016, saying that the platform would go live in January 2017. But a series of setbacks, led to the service only coming on stream in the UAE last September, and only going live in Saudi Arabia in December.
The partnership with eBay provides noon the opportunity to compete with Souq on scale.
“Being able to offer millions of products at any given time is a key differentiator for any e-commerce player who wants to lead the industry,” said Sauvik Tegta, a senior Manager at consultants A.T. Kearney
“Noon has already announced plans to offer a product assortment that exceeds 20 Million SKUs (stock keeping units), and the partnership with eBay will further help it achieve and exceed this target. This is especially crucial considering its competitor Souq.com already offers access to the Amazon Global Store service.”
While e-commerce accounts for a tiny proportion of retail sales in the Gulf region compared with markets in Western Europe and Asia, the rising penetration of smartphones and the entry of leading global players such as Amazon and eBay is forecast to accelerate growth in the sector.
“Consumer awareness was one of the barriers, but with Amazon entering the market and with large investments from Noon and traditional retailers, e-Commerce has garnered significant industry and the media spotlight that has raised its profile across GCC,” said Tegta.
Significant progress has been made in the last mile delivery within the GCC, one of the key challenges facing e-commerce players both in the region and abroad, he said.
An example of this was the growth of local delivery firms such as Fetchr, which raised $40 million in funding last year to scale up to meet growing demand for online shopping deliveries.
But the region still faces a series of logistics challenges, Tegta said.
“Warehouses and fulfillment centres are still not optimally located close enough to the market demand, so it can take several days to get products from a warehouse to a distribution center,” he said.
The GCC’s e-commerce market is forecast to be worth $24 billion by 2020, compared with $5.3 billion in 2015, according to A.T. Kearney forecasts.