Is Amazon Looking to Take Out Noon in the Middle East?

Amazon is on the move again.

In Europe, the Middle East and Africa (EMEA), the global tech giant is acting with a growing boldness to expand its eCommerce footprint in the region.

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In addition to recently leaked documents that reveal the company is to launch its eCommerce business in Belgium, Nigeria and South Africa, several recent announcements suggest Amazon is also looking to firm up its presence in the Middle East.

This month, the firm launched its global Delivery Service Partner (DSP) program in Saudi Arabia and opened a new 4,700-square-meter distribution center in Abu Dhabi.

Since 2019, the Amazon marketplace has been available in both Saudi Arabia and the United Arab Emirates (UAE), following its acquisition of souq.com for $580 million in 2017. As a result of the souq.com takeover, Amazon entered those two countries with a strong hand. Since rebranding the business, it has retained the market lead that Souq established.

Yet Amazon is not the only eCommerce marketplace vying for a share of the market in Saudi Arabia and the UAE.

Noon.com brands itself as an “Arabic-first” shopping platform that offers a more regionally-focused alternative to the American multinational.

In both countries, Noon offers an extensive range of products across sectors, including electronics, fashion, home and kitchen, beauty and groceries. As with Amazon, shoppers can make purchases online or via a mobile app.

More on this: Noon And The Race For Middle Eastern eCommerce

Logistics at Noon

One area where Noon has traditionally outperformed Amazon has been its delivery and distribution service. For many items, the company offers same- and next-day delivery options, and there is a network of Noon collection lockers throughout Saudi Arabia and the UAE.

When it comes to supply chains and fulfillment, from the beginning, Noon has differentiated itself by focusing on the establishment of partnerships and addressing the specific needs of the local markets it serves.

Noon’s suppliers in the region include Kuwait’s Alshaya group and Saudi Arabia’s eXtra. What’s more, since signing a deal with eBay in 2018, Noon has offered its customers in the Middle East the opportunity to buy products from the U.S. and other parts of the globe, with fulfilment handled by Noon.

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When it comes to regional distribution, however, it’s not all smooth sailing. In Saudi Arabia for example, an inaccurate and inadequate street addressing system makes last-mile fulfilment difficult for eCommerce retailers.

To solve the problem, Noon has developed its own in-house address system, which assigns each customer a unique geotag, a company representative explained to Logistics Middle East in 2018.

Amazon Courts Commerce Authorities

Two recent announcements suggest that Amazon is moving to lay down its own logistics roots in Saudi Arabia and the UAE. To do so, the eCommerce giant seems to have made a strategic decision to team up with local business authorities.

Earlier this month, at an event at the Monsha’at (Saudi Arabian SME Authority) headquarters in Riyadh, Amazon announced the launch of its global DSP program in the country.

The DSP program, which is already operational in the U.S., Canada, the U.K., Spain, Germany, Italy, Ireland, Brazil and India, is intended to help local businesses set up and manage Amazon delivery services.

The U.S. firm also opened its largest delivery station — the second largest in the country — in Abu Dhabi this month, which aims to bolster the firm’s ability to offer consumers in the emirate the much faster Amazon Prime delivery service.

The company also intends to open a new “technologically advanced” fulfillment center with the cooperation of the Abu Dhabi Investment Office (ADIO), and in line with the UAE’s goal to achieve net-zero carbon emissions by 2050.

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Expected to be launched by 2024, the new fulfillment center is part of an ongoing collaboration between Amazon and ADIO aimed at supporting local startups and SMBs in the distribution sector, and by extension grow the company’s presence in the emirati eCommerce market.

Against the backdrop of Noon’s established network of local suppliers and proprietary last-mile fulfilment solutions, the latest moves from Amazon look like a bold challenge from the multinational that clearly intends to entrench its market lead in the two countries.

Both companies will also be looking to Egypt as a potential battleground for eCommerce supremacy, where a huge base of consumers and a wealth of untapped potential make it an appealing regional prize for expansion.

Amazon entered the Egyptian market via the Souq acquisition, but it was the last of the three countries that Souq operated in where the business was fully transitioned to Amazon marketplace.

Meanwhile, although Noon moved into the country just a year after launching in Saudi Arabia and the UAE, to date the company has made the tactical decision to double down on its core markets before diverting resources to regional expansion. That being said, the company has made no secret of its ambition to grow across the Middle East and North Africa.

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