SEATTLE/DUBAI: March 28, 2017. Amazon is to acquire eCommerce company Souq.com, the largest online marketplace in the Arab world with 45 million visits a month with local operations in the UAE, Kuwait and Egypt.
According to a recent report by A.T. Kearney, the GCC region has the potential to become the world's fastest growing e-commerce market. In 2015, it contributed US$5.3 billion or 0.4 percent to GDP compared to an average 3.0 in parts of Europe, Asia and North America.
A.T. Kearney says the market could reach US$20 billion by 2020 if several obstacles to growth were removed including: consumer trust and awareness, gaps in payment systems, distribution and logistical infrastructure, government policies, data security and fraud.
"We expect the growth of e-commerce in the GCC to transform the future of businesses, economics and lives across the region – but only with the right set of enablers in place," commented Laurent Viviez, a partner at A.T. Kearney. " And it doesn't rule out traditional retailers, who can be on the winning side of e-commerce by adopting an omni-channel approach.
"We see the future for the sector as not digital-only but 'physical with digital' – traditional retailers can really tap into this," she added.
According to CEO and co-founder of Souq.com Ronaldo Mouchawar, when he stared the company 12 years ago the aim was to combine technology to give the Arab world a way to trade online: "This is a milestone for the online shopping space in the region. As we take this next step in the journey with Amazon, [it] will enable us to drive further growth, [and] benefit from their technological investment."
Last month Souq.com opened its first bricks and mortar center in Dubai (right) for customers to experience products before buying them online, collect them once purchased, and return or service merchandise previously purchased. The center also serves as an extension of Q-Express, the company's logistics arm.
"Amazon and Souq.com share the same DNA – we're both driven by customers, invention, and long-term thinking," commented Russ Grandinetti, Amazon senior vice president, International Consumer. "Souq.com pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We're looking forward to both learning from and supporting them with Amazon technology and global resources.
Terms of the acquisition were not disclosed and subject to closing conditions, it is expected to finalize this year.