Consumer behavior, digital innovation drive e-commerce boom

Retail businesses are adapting as consumers in the Middle East and North Africa region embrace online shopping and drive e-commerce growth.

Consumers nowadays are becoming more and more familiar with e-commerce. Sure, the pandemic acted as an accelerator, but the truth is that the trend was already there. Over the past decade, MENA’s e-commerce industry has grown steadily, owing to the development of the region’s digital ecosystem, well-developed logistics infrastructure and consumer trust in digital payment methods.

The UAE is a shining example: The country has been ranked as the world’s fastest-growing e-commerce market and is well on track to surpass $8 billion in online sales value by 2025, up from $5 billion in 2021. And when we take a look at the big picture, MENA’s e-commerce sales are expected to reach $50 billion in 2022, up from $32 billion last year.

Digital innovation leads the show

We would not be discussing the e-commerce explosion if it were not for technological breakthroughs between 2010 and now. Back in the 00s, anyone who wanted to shop online needed a laptop or a desktop computer and a solid internet connection, neither of which could be taken for granted.

Fast forward to today, the development of 4G and 5G networks paired with the region’s increasing smartphone adoption paints an entirely different picture.

91 percent of consumers in MENA have become digital converts since the pandemic and are likely to continue buying online.

Taarek Hinedi

The mobile economy is thriving. In 2021, MENA had 412 million unique mobile subscribers, with smartphones accounting for 77 percent of overall connections. The number of unique mobile internet users is expected to rise to 362 million by 2025, up from 307 million in 2021, representing a 54 percent penetration rate. It means around half of the MENA population has access to online shopping, with new payment schemes, such as the popular buy now, pay later short-term credit, making e-commerce more tempting.

Online shopping is here to stay

Due to pandemic-related lockdowns, consumers in the MENA region, like many shoppers across the globe, have turned to digital channels to buy goods they need, with groceries and electronics among some of the fastest-growing categories. In addition, some consumers, particularly older adults, have realized the benefits of online shopping for the first time.

The rapid adoption of online shopping has permanently altered the face of retail. Since consumers have discovered a convenient and available on-the-go way to shop, several businesses that had heavily invested in physical stores have even decided to close their outlets or cease operations entirely.

Undoubtedly, online shopping looks set to stay. In fact, 91 percent of consumers in MENA have become digital converts since the pandemic and are likely to continue buying online.

Quick commerce

In this increasingly fast-changing, challenging, and competitive environment, where consumers shop less in-store and more online, expectations about the shopping experience are shifting. Thus, retail businesses must build a strong e-commerce strategy to stay ahead of the competition and capitalize on new growth opportunities.

What could be considered a successful e-commerce strategy, though? Investing in capable software and hardware infrastructure to provide consumers with an excellent user experience is one thing. However, consumers in the UAE, for instance, have less patience with slow or poorly functioning websites.

The support of an efficient and reliable e-commerce logistics partner to deliver success is another. A recent PWC consumer insights survey revealed that fast and reliable delivery remains the second most crucial factor for purchase decisions after price. More than ever, consumers want quick, time-definite, and flexible delivery solutions with easy returns.

Certainly, guaranteeing on-time deliveries to customers is challenging. But, with digitized processes for customs documentation that can help e-commerce businesses streamline lengthy or complex paperwork procedures, application programming interface integration to give customers a seamless experience, and delivery management on the customer side to make deliveries more convenient, businesses that work with the right logistics provider can gain a competitive advantage. Consequently, all these lead us back to digital innovation.

In the end, although consumer behavior and digital innovation seem inextricably linked, we, as consumers, and our ever-evolving needs, are ultimately driving e-commerce’s exponential growth.

• Taarek Hinedi is vice president of FedEx Express Middle East and Africa Operations.