Mena general manager for Checkout.com Remo Giovanni-Abbondandolo on Tuesday highlighted four trends that e-commerce in the region is undergoing, at The Retail Summit in Dubai.
The event is taking place at The Atlantis, The Palm, until March 15.
Checkout.com is a digital payment solutions provider, and its clients include retailers such as Alshaya Group, Chalhoub Group, Majid Al Futtaim, and Landmark Group among others.
Growth of e-commerce and buy-now-pay-later options
E-commerce is continuously growing in the region.
“According to an Amitad study published earlier this month, Mena leads the online marketplace orders globally with over $25b in 2022. With 88 per cent of consumers in Mena saying they will maintain or increase their current level of e-commerce spending into 2023, the coming few years look very promising for retail on e-commerce channels,” Mr Giovanni-Abbondandolo told ME Retail News.
Secondly, consumers are increasingly preferring digital transactions over cash payments.
“Cash on delivery has almost disappeared in the UAE, and is drastically decreasing in Saudi Arabia.”
Insights from Checkout.com also found that 70 per cent of consumers in 2022 used digital means to pay for products, as compared to 40 per cent in 2020.
Mr Giovanni-Abbondandolo noted that Saudi Arabia is growing the fastest in adopting digital payment options.
“The combination of a digitally savvy population and a mature retail sector will ensure these gains are sustained in the long run.”
“Additionally, the growing trust in online payments by UAE shoppers means the digital transformation of the UAE retail sector is well underway. This is underlined by the emergence of Web3 as a key component of the online experience, with shoppers showing a significant appetite for transacting on-chain, and a desire both to be paid and to pay in digital currencies.”
The third trend is the growth of buy-now-pay-later options.
Statistics by Checkout.com showed that half of all people surveyed in the UAE and Saudi Arabia used BNPL options in 2022.
“Retail is leading the growth [in BNPL options]”, Mr Giovanni-Abbondandolo said.
$89.27 billion is the value the BNPL industry will reach in Mena in 2030, and it will grow 64 per cent year on year.
Challenges ahead
The last trend highlighted by Checkout.com’s survey was the continuous growth of cross-border sales in the region.
85 per cent of those surveyed said that they ordered products through global platforms because the items were not available on their local websites.
This shows that global retailers have a huge opportunity to grow in Mena.
“Throughout the Mena region consumers are hungry to purchase across borders – both within the region and across the globe. Shoppers here look to brands in China, Europe and the US as well as those closer to home. From a merchant perspective the opportunity is vast in this economically resilient region,” the report said.
However, the rules and regulations in the region differ from country to country.
Countries in the region also have local payment platforms that dominate the industry, making it difficult for global retailers to enter the market.
“Local payment methods and varying preferences for alternative payment methods are a hallmark of the region and without matching consumer needs at the checkout merchants will be falling,” the report added.
Mr Giovanni-Abbondandolo said that such retailers need to enable local payment options in order to expand in the Middle East.
