The Middle East market
A slight difference between the Middle East and the MENA is that while considering the former some of the North African countries are excluded. However, there is no steadfast definition to it. In this blog, we will restrict our focus to the six GCC countries and Egypt, Turkey, Jordan, and Cyprus going by the parameter of ease of doing business.
Collectively, the Middle East offers a large regional market with geographical proximity that provides the impetus for cross border trading. Egypt, Turkey, and Saudi Arabia (KSA) are the three most populous countries in the region. With a population of over 100 million and being the largest retail market in the Middle East, Egypt provides a massive customer base for its own and regional businesses in nearby countries. Area-wise, Saudi Arabia (KSA) is the largest country in the region. KSA’s population is about one-third of that of Egypt’s but its retail market is more mature. Turkey holds immense retail potential as the country is second-most populous in the region but has a fairly nascent retail market size.
Cyprus, a relatively small country in the Middle East performs one of the best when it comes to ease of doing business. So, there is a good likelihood that businesses can establish quickly and start focusing on cross border trade. Qatar is yet another small country but boasts the highest per capita income in the region, even surpassing that of the UAE. Bahrain is the most densely populated country in the region that performs fairly well on ease of doing business.
The UAE remains unbeatable in the region ranking in the top 20 countries in the world for ease of doing business (best in the region), stupendous internet and smartphone penetration rates, robust logistics and infrastructural facilities, and a pro-business environment. With a population of close to 10 million, it has the second-best per capita income in the region after Qatar.
Cross Border ECommerce in the Middle East
For viable cross border eCommerce, the target market regions must fulfil certain essential conditions. These are good internet and smartphone penetration, robust logistics network, availability of sufficient and well-equipped distribution and fulfilment centres, business IT systems critical for eCommerce, eCommerce as a popular or growing channel of shopping among the masses, an efficient digital baking system, and a business-friendly regulatory environment. The Middle East countries do fairly well on these parameters with a certain degree of variation from country to country. The internet penetration rates are above 90% in the GCC countries. The UAE is leading the eCommerce race with the biggest eCommerce market in the region followed by Turkey. One way or the other, each of the countries in our list favours cross border eCommerce. The challenge lies in crafting the right eCommerce strategy for each market. Despite the greener side, each market has its own pros and cons. Sometimes it is about fine tuning value to customer expectations. Sometimes it is about adopting the right competitive stance. Sometimes it is about coming up with a sustainable business model. And so forth. The interplay of multiple countries makes it difficult for many retailers to come up with effective cross border eCommerce solutions for the Middle East market.
Doing it right
Here are a few fundamental ways in which cross border eCommerce companies could get better at managing their business in the Middle East.
Market Research – Evaluating a foreign market
Doing market research remotely from another country is not an easy task but it is the quintessential first step to evaluate a target market in terms of identifying the target segment, determining the target market size, read the intensity of competition, understanding consumer behaviour, channel-wise product performance, etc. Even within the Middle East, there are differences in market regions. For instance, the high per capita income may not be the sole criteria for deciding the market potential of luxury retail products in a country. Businesses need to see how the luxury retail industry is actually fairing in the target market region, how big is the customer base, the buying trends, and the presence and activities of competitive brands.
Business Model – Offering the right value profitably
A business model defines how your business is going to be a hit with customers towards ensuring that customers continue to buy your products and there is a steady flow of revenue. And most importantly, you will have to be able to do it profitably. Understanding the customer needs and expectations and prevailing competitive products and services will help you identify the gaps your eCommerce enterprise could fulfil. Having a stronger customer support system than your competitors would be a good example here. In addition to creating a UVP, you will also have to figure out how that value will be delivered to your customers going through the value chain. And finally, you must be able to execute your intended business model profitably.
Digital Marketing – Ensuring online presence and visibility
Barring Egypt, all the nine other countries we considered as part of the Middle East has internet penetration rates higher than the global average. The average figure is above 90% in the GCC. With high exposure to the internet, it becomes imperative for eCommerce players to reach out to their audiences on digital platforms. For cross border eCommerce retailers, digital marketing is a more effective and efficient channel of advertising. The Middle East eCommerce market is mostly concentrated in the GCC but there remain huge grounds to cover in Saudi Arabia considering its population and a humongous retail market after Egypt. Egypt, despite having lower internet penetration and a minuscule eCommerce market, is the most populous country and the largest retail market in the region. Either with their own team or with the assistance of any cross border eCommerce consultancy firms for the Middle East market, eCommerce retailers simply cannot afford to dodge digital marketing.
ECommerce Website/Application – Focus on UX and localization
As the website/mobile application of an eCommerce enterprise is its virtual store, retailers need to ensure that it is customized/localized for each country market. Retailers need to comprehend the customer journey from the perspective of their local customer base. This includes focus on critical areas like the web/app design and its user interface, the ease of navigating, language compatibility, multiple device support, the web and digital marketing content, the payment options, customer support, back-end technologies and a curated front-end user interface.
Managing the fulfilment network
The fulfilment process begins with customers placing orders and ending with getting the order delivered to customers’ doorsteps. In cross border eCommerce, planning the fulfilment network will span across countries. Here, the entire region must be considered as one operational network. This means the orders will have to pass through varying custom formalities, multiple fulfilment centres and hubs, and different logistics associates for transportation and last-mile delivery. Without planning and mapping, managing such a complex fulfilment network is simply not possible. If you hire professional services for this purpose, such a team of cross border eCommerce consultants for the Middle East market will have to work closely with your business to chart an effective fulfilment network.
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