Gulf e-commerce market seen exploding after Amazon entry

CBRE report says region is on the cusp of a major e-commerce growth spurt after Souq.com takeover

The Middle East is on the cusp of a major e-commerce growth spurt, underpinned by the move by Amazon into the region with its acquisition of Souq.com, according to a new report.

Research by property advisor CBRE said that online shopping in the Middle East is rapidly evolving and has grown drastically over the last decade.

With a dynamic, young population and one of the highest global per capita internet penetration levels, the online spending potential is quickly emerging as one of the highest in the world, noted CBRE.

It added that the growth of e-commerce in the region is complimenting bricks and mortar stores and aiding the physical shopping experience for consumers.

CBRE said in the report that Dubai ranks number three in the world in terms of new market entrants, welcoming 59 new brands in 2016, with 32 percent of these new entrants being specialist retailers, many of which were athletic-leisure brands such as Under Armour, Jordan, New Balance and GapFit.

Dubai also retained second position for international retailer representation for the sixth consecutive year, closely behind London which retained the number one position. With high occupancy levels in major retail hubs and many malls approaching full capacity, Dubai’s overall retail sector remained resilient in 2016, the report noted.

Nick Maclean, managing director, CBRE Middle East, said: “With a rapidly expanding internet audience and strong logistics infrastructure from the ground up offered by companies such as Fetchr, the Middle East has become a fertile soil for e-commerce.

"Currently the e-commerce market is dominated by a handful of players, however rapid growth in the sector and the upward trajectory of local companies has attracted an influx of investment in recent years. The evolution in consumer behaviour, mobile technology and retail shopping will continue to revolutionise the e-commerce sector in the region in the years to come.”

He added: “Dubai’s global air connectivity and its stature as a hub for trade between the East and West has clearly given an added impetus to the retail sector. Dubai continues to remain the clear destination of choice for the majority of the brands looking to enter the region, frequently using the emirate as a stepping stone to wider regional expansion programmes.”

Doha rose six places in the new entrants’ ranking, with 58 new brands establishing themselves in 2016 compared with 29 in 2015, the report said, adding that the Qatari capital has transformed its retail market in the past few years with the development of many large-scale malls.

Globally, the report revealed that Hong Kong retained its position as the top target market for new entrants in 2016 with 87 new entrants, followed by London in second place with 65 new entrants.

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