PayPal Insights e-commerce report reveals trends in mobile, travel in the Middle East
The idea that mobile is the future of e-commerce isn’t new, but it
may surprise some to learn that shoppers in the Gulf already prefer
smartphones to computers or tablets when shopping outside their
homes.
According to a new study
by PayPal released today, focusing on the UAE, Saudi Arabia,
and Qatar, shopping on mobile is exploding in the region.
Mobile transactions already represent 10% of
e-commerce (a level similar to the rest of the world), but they
are set to reach close to 20% of transactions in the Middle
East by 2015, as the m-commerce market grows from 1.3
billion this year to 3 billion by 2015.
Revelations about mobile are just part of the comprehensive
report, which surveyed 1811 shoppers, 511 from the UAE and 800 from
Saudi Arabia, and another 500 from Qatar, making it one of the
largest e-commerce surveys to be conducted in the region.
Market growth
While e-commerce companies still struggle with a variety of
challenges, from customer trust to reliable logistics, the report
estimates that 30 million people are now shopping
online in the Middle East, up 65% from 2011, and that the
e-commerce market is set to grow from US $11.2 billion
today to US $15 billion by 2015.
Of that $15 billion, Saudi Arabia will account for US $2.7 billion,
Qatar will account for US $1.25 billion, and the UAE will account
for the lion’s share at US $5.1 billion. (Today, the report
estimates that these markets are valued at US $1 billion, US $700
million, and US $2.9 billion, respectively.)
A significant amount of that spending will be due to
m-commerce (US $700 million in Saudi, US $100 million in
Qatar, and US $1.5 billion in the UAE, the latter mostly driven by
tablet adoption).
Where are people
shopping?
Interestingly, most of these shoppers are not
spending at companies based in the Arab world; the
majority of online shopping is done in the US (35%); Asia (30%) and
Europe (25%), with the Arab world accounting for 10% of
e-trade.
Yet the report also reveals that 52% of those surveyed
in the UAE shop at Souq.com, although percentages aren’t
revealed for other e-commerce sites.
Most of those polled said that they prefer online to offline shopping thanks to convenience (26%), lower prices (18%), and product variety (15%).
The opportunity in travel
Another major trend the report reveals is that travel is
the most lucrative e-commerce segment, with consumers
spending an average of $1,521 per year.
The next largest segments are consumer electronics ($250 per
consumer per year), computers ($248), jewellery and watchers
($222), and event tickets ($201). Ironically, given the recent boom
in fashion e-commerce sites, fashion and accessories are at the
bottom of the list, at $107.
Cash on Delivery
The report also touches upon the challenges of Cash on Delivery
(COD), which represents more than 80% of online purchases, followed
by cards at 15% and PayPal at 5%.
Yet by 2015, use of COD will have shrunk to 60% of all orders,
while payment card use (including both credit cards and prepaid
cards) will grow to 25%, and use of PayPal will grow to 15%.
Future Growth
Concerns about security may remain the biggest challenge to
bringing more shoppers online; today, 40% cite it as a primary
concern. PayPal, of course, is working to reduce that fear by
building trust; throughout the report, the company reveals its plan
for a mobile wallet, and alternative payment systems that will
circumvent COD.
Those looking to expand m-commerce on their platforms should, the
report says, enhance their user interfaces (an obvious point), and
use coupons (although flash sales sites and daily deals are already
discounted, the implication is that "coupon" means a discount
specifically for using one's mobile). One third of those polled in
Qatar, 25% of those in the UAE, and 33% of those in Saudi said that
they would shop on mobile more often if they had a coupon or
monetary incentive to do so. Do you agree?
Click here
to download the report.