Between the year 2020 to 2022, as per the prediction done by the Kearney Middle East report estimates that the GCC E-commerce arena will have an expansion of 20 percent per year-on-year basis.
Within the next five-six years, the GCCs E-commerce arena is estimated to get double to $50 Billion, an up by $24 Billion as forecasted this year, with the pandemic related restrictions that has hugely led to shifting in the shopping habits within the region, as per the new report done by Kearney Middle East consultancy.
This latest report from the Kearney consultancy predicts that the expansion of this sector will be at a compounded annual rate averaging 20 percent in between 2020 and 2022, with the expansion tapering off to 14 percent per year on year basis in between 2022-2025.
Adel Belcaid, partner at Kearney Middle East stated that “Covid-19 has caused an unforeseen thrust and has provided latest as well as an accelerated lease of new life to the sector, in the line with what has been observed within the global markets. He accredits the expansion to the swifter change as observed within consumer behaviour, which has been prompted largely due to newer normal of social distancing, restrictions in movements as well as curb in capacity as observed within the physical stores.”
The E-commerce and logistics giant Amazon’s sales within the GCC territory surged 26 percent to show up at $76 Billion within the first quarter this year in 2020. Meanwhile, the delivery app Instashop has also witnessed 70 percent spike within app downloads and the online ordering has surged to 53 percent, as according to Kearney’s report.
Kearney further stated that “the average percentage of the goods procured by the GCC household online has risen sharply to 8 percent during 2020, as from the 2 percentage as seen during 2015. There is a lot significant room for expansion, as the E-commerce arena has seen huge growth potential in developed markets like US, China, Korea as well as Germany that has witnessed 16 to 25 percent and still a huge growth potential.
The E-commerce firms have reported powerful sales as well as huge potential cycle with the stay-at-home directives for containing the COVID-19 prompted public for shopping online.
Two core sectors within the retail ecosystem- Real Estate as well as Small and Medium Enterprises have shown likely implications of the E-commerce expansion as the Kearney report explores all possibilities. The report further stated that “Latest E-commerce marketplaces, surged up investment within the digitalized channels via the retail giants as well as the declining trend as seen within the physical store sales can largely make a huge impact within the commercial real estate values as well as have a huge challenges for the survival of the SMEs that have not yet adopted or yet in pursuit to adopt the online sales medium.”
Debashish Mukherjee, partner at Kearney Middle East stated further that “those who are in position or have already done investment opportunities in unearthing the total potential of E-commerce arena have already weathered off the storm and thus, they are hugely better positioned for leading from the front in the post-Covid-19 retail revival. More than ever…. Those who have failed for making required changes as well as where the investments can be sidelined and also their very survival will be a huge question mark.”
According to a past survey done by the Chicago-based consultancy, it stated that 36 percent of UAE SMEs have largely invested for preparation of an online future, however, only 4 percent are in pursuit to sell them online in the near future.
Mr. Mukherjee also further added that “All stakeholders must have to take note and come back to their strategies, operating models as well as the policies for development of their ecommerce operations.”