Has Covid 19 provided the impetus to Ecommerce penetration rates in the Middle East?
The recent environment of physical distancing, restricted physical store access has heightened the need for physical stores to have an online presence and more importantly to have high visibility. In a recent survey conducted by Colliers, physical stores with an ecommerce platform have seen their ecommerce sales increase between 20% and 70% from pre Covid 19 months and expect it to continue in the short to medium term. A more striking response from retailers to a question on whether they would be investing in an ecommerce platform in the near future was that 24% of the respondents did not have an ecommerce site and all said they would be investing in setting one up, while the remaining respondents that already had one said they would invest further in their current platform.
Prior to Covid 19 the average penetration rate of ecommerce was a mere 3% in the GCC with current and projected growth of 25% per annum. If we break down the variables that determine penetration as indicated below it is clear that the only variable missing in the GCC countries when compared to countries with high Ecommerce penetration is the purchase frequency, something that an extended Covid 19 environment could lead to a long term behavioural shift or accelerated adoption rate.
While one must remember that even mature developed markets currently only have an average Ecommerce penetration of 10 to 15%, an accelerated growth and adoption in the GCC looks likely and what is key for growth is high visibility. 81% of retail shoppers conduct online research before buying. The overwhelming majority of retail consumers start their journey with online research. Platforms and Apps that provide users with promotions and offers from multiple retailers that facilitate discovery, research and possibly purchase would be ideal partners for retailers through this transformation journey.
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