Middle East SMBs Should Brace For E-Commerce Boom, Study Says

Investment and funding in e-commerce throughout the Middle East is expected to sky-rocket in the coming decade according to recent research, and the projections could have wide implications for business-to-business operations in the Gulf region.

A new report from Frost & Sullivan found that spending in e-commerce by Gulf Corporation Council (GCC) nations could see a hike by 40 percent by 2020.

The study, Frost & Sullivan senior partner and practice director Sarwant Singh said, will make a major impact on the regions small- and medium-sized businesses as well as players in the B2B space; B2B e-commerce is expected to account for a quarter of the predicted $200 billion worth of e-commerce throughout Middle East North Africa (MENA) by 2020, the consulting firm said.

The United Arab Emirates was found to most likely lead the e-commerce expansion thanks to its position as having the highest computer ownership in the Middle East, Frost & Sullivan Found, as well as highest in Internet penetration and highest per capital retail spending.

The UAE holds a whopping 53 percent of the e-commerce market share across GCC nations, reports say.

Overall, Frost & Sullivan found that e-commerce makes up just 2 percent of GDP across the Middle East and North Africa, but Singh said by 2020 it will likely contribute to at least 5 percent.

An expansion of e-commerce comes at a time when experts say B2B players need to be extra invested in offering services in a digital format. Company buyers, for example, are increasingly turning to the Internet to research, and ultimately purchase, items for their firms.

According to recent findings by Forrester Consulting, buyers are not only migrating online for procurement, but are also demanding similar e-commerce experiences had by the typical B2C shopper. Forrester found that 49 percent of survey respondents prefer to have the same B2B online shopping experience as their own personal online shopping experience.

While the demand for B2B suppliers to offer research and shopping resources digitally is climbing, the Middle East and, in particular, the UAE, have a particularly wide opportunity for the B2B industry to expand altogether. Experts say the recent departure of major banks from the UAE have opened a door for alternative lenders to fill the lending gap for SMEs.