Noon.com set to trigger 'price war' in MidEast e-commerce market

Analyst says e-commerce competition 'will help change the culture of shopping in the region'
By AFP
Mon 02 Oct 2017 02:38 PM

Days after Amazon announced the launch of its first Middle East centres, online retailer Noon.com has gone live in the United Arab Emirates, boosting a rapidly nascent e-commerce sector in the Gulf.

The site started working at the weekend and the app is scheduled to launch in days, its backer Dubai-based real estate giant Emaar Properties said in a statement.

Analysts say the arrival of Noon.com is expected to trigger a price war in the developing regional e-commerce market and will likely alter how shopping is done in the consumerist culture of the Gulf.

"It is important for us to shape a digital marketplace that is relevant to our local markets and serves as a growth platform for brick-and-mortar retailers," said the project's founder, Emaar chief Mohammed Alabbar.

Investors of the $1 billion project include Saudi Arabia's Public Investment Fund and leading Kuwaiti retail business group MH Alshaya Co.

Described by Emaar as an "Arabic-first e-commerce platform", Noon.com will offer a range of clothing, home goods and grocery staples.

It is also expected to start delivering to Saudi Arabia within the next few weeks.

The news comes just six months after Emaar offered $800 million to acquire rival retailer Souq.com but lost to international giant Amazon, which acquired the region's biggest online retailer for $650 million.

On September 25, Amazon Web Services announced a deal with the government of Bahrain to open its first Middle East data centres in the Gulf, expected to be ready by 2019.

Combined with the interest of Amazon and its subsidiaries in regional e-commerce, Noon.com and Souq.com are expected to intensify competition in what consultancy McKinsey has called an untapped e-commerce market.

E-commerce competition "will help change the culture of shopping in the region in the long-term," said the CEO of Dubai-based Old Town Advisors consultancy.

"I don't think the (e-commerce) market is saturated to such a point" that there is no place for newcomers, Faraz Mehmood told AFP. "There is still room for more."

Smaller players in the online shopping market may, however, find it difficult to compete, Mehmood said.

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