It’s been a long time since Amazon acquired SOUQ, but it has never integrated the brand into Amazon. Now it has finally taken action and completely switched SOUQ to Amazon.ae.
For e-commerce in the Middle East, SOUQ's market has always been aimed at the world of the rich, and it has developed well and has high profits, but there are also many pitfalls, so you have to understand the current situation yourself and have enough confidence in the Middle East market.
Amazon and Souq have announced the launch of Amazon.ae, which replaces Souq.com in the UAE, nearly two years after the US giant acquired the e-commerce platform for $580 million (Dh2.13 billion).
“It’s a great day. I think first and foremost it’s our customers, it’s really great. We bring a lot of local knowledge about how our region can integrate with the services that Amazon offers globally,” said Ronaldo Mouchawa, co-founder of Souq and vice president of Amazon Mena.
Souq attracts 45 million visitors per month and its product categories include electronics, fashion, fragrance and beauty, home and kitchen, and supermarket.
With a localised presence in the UAE, Saudi Arabia and Egypt, Souq opened a new 40,000 sqm office in Dubai South in September, adding more than 650 new employees.
Mr Mouchawar said the shift to Amazon.ae had been ongoing since the acquisition but had accelerated recently, with many employees working overnight on Tuesday to prepare for the launch. Preparation steps include unifying login information, introducing more products through the global store, providing localization tools for suppliers and sellers, and finally providing Arabising content.
“We don’t have a timeline in terms of when that will happen. We make sure that whatever we launch is what our customers expect from Amazon,” he said.
Speaking about future expansion, Mr Mouchawar said: “We still feel that e-commerce has a long way to go in this region. We are focused on the current markets. Today Souq has local websites and Amazon in the UAE, Saudi Arabia and Egypt, so we want to make sure that in these markets we can provide an excellent service to our customers.”
The region’s e-commerce sector is growing at the fastest pace in the world, with online sales expected to double to $48.8 billion by 2025, according to a report by Fitch Solutions Macro Research. E-commerce spending in the UAE is expected to grow 170% to $27.1 billion by 2025, from $9.7 billion in 2017.
“Amazon.ae brings together Souq’s local know-how and Amazon’s global e-commerce expertise, which we believe will be of great benefit to UAE customers. Our combined team in the region has grown to over 3,600 employees, and everyone in us is excited to invite UAE customers to join us on our journey as we continue to expand our product range, ensure great prices, and provide a convenient and secure shopping experience,” he said.
Customers can shop on Amazon.ae using the Amazon app or by visiting the new website. Both the app and website will offer a fast and rich browsing experience, accurate search results, trusted product reviews, personalized recommendations, and simple order management.
A completely localized and hassle-free experience, shoppers can search for their favorite products and pay using local and international credit cards or Cash on Delivery (COD).
Amazon has introduced Arabic language for the first time on its mobile app and website.
Customers shopping on Amazon.ae will continue to enjoy free next-day delivery on orders over 100 and same-day payment in selected areas in the UAE, the company said in a statement.
Amazon’s global expertise in logistics will provide accurate delivery and freight tracking, and will continue to invest in improving the delivery experience. Thousands of businesses that sold on Souq are now selling on Amazon.ae.
The Middle East has a population of approximately 490 million, with more than 60% of UAE residents and approximately 50% of Saudi Arabian residents purchasing goods on foreign websites, with average spending exceeding US$300 and US$90. The main consumer force is young people. It is reported that more than 28% of the people in the Middle East are between 15 and 29 years old, which means that at least 120 million young people are driving the development of e-commerce shopping in the Middle East.
In addition to the younger generation, the Internet penetration rate of 60%, which is higher than the global average, has also contributed to the development of e-commerce. In particular, the Internet penetration rates in the UAE, Qatar, Saudi Arabia, Jordan, Lebanon and Bahrain are all over 90%.
1. Logistics: The logistics facilities in the Middle East are not perfect, and it is difficult to obtain a self-operated logistics license. The logistics problems are particularly evident during the two major promotions in the Middle East each year. Ramadan and Black Friday will bring serious problems of insufficient transportation capacity. In order to compete for transportation capacity, unit logistics prices will rise.
2. Payment: In the Saudi market, COD (cash on delivery) will still be the mainstream. Card payment (credit and debit cards) will develop rapidly under the government's promotion, and local e-wallets remain to be observed. However, in the UAE, where card payments are more developed, e-wallets may rise first based on the development trend of the e-commerce market.
3. Tariffs: In Egypt, e-commerce goods from China are generally subject to heavy taxes, with tariffs on Chinese textiles exceeding 90%. Compared with B2B, the B2C model will increase the burden on sellers in terms of transportation. If you set up a factory locally, costs will be greatly reduced, but you will also face many problems that need to be solved in localized production.
4. Religion: For example, due to religious and cultural reasons, e-commerce companies in the Middle East do not like "Black Friday", so platforms such as Souq have changed it to "White Friday" or other marketing selling points.
5. Reputation: Chinese products have particularly prominent quality issues and are priced very high. Chinese sellers sell the same products online at three to five times the price, resulting in a very poor consumer experience, an inability to build a good reputation, and difficulty acquiring customers.
6. Language: Arabic is the preferred language in the Middle East. Sellers can translate the product content into Arabic as appropriate, otherwise English packages are likely to be rejected.
