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The middle east has some of the world’s highest level of GDP per capita with a lot of disposable income. However you are right in concluding that the E-Commerce market churns one of the lowest revenues as compared to other strong economies. There are several challenges that are being faced by this industry including but not limited to Trust, Logistics, Payments, Infrastructure and policies to name a few. The Middle east has a very high ratio of Cash users which is detrimental for the E-Commerce business. Secondly payment infrastructure is still being concretized and payment through cards are still evolving. When you combine the cash Issue with the trust issue it pretty much appears like a snowball effect and models like Cash on Delivery play a big role, since that solves the cash and trust issue, however is not a very profitable E-Commerce model. Here in the US we do not have cash on delivery models, since it is a pretty aware market and is very comfortable using plastic money, and with banks coming up with a lot of anti-fraudulent measures totally helps the cause.
Logistics plays the second major part in the E-Commerce industry and is one of the other biggest challenges it has to face. One issue for e.g. is that a lot of addresses being in form of Po box number poses confusion and difficulty for the courier and delivery companies and add to it the lack of a multiple courier companies or postal service adds to the problem. In the US the postal service reaches every nook and corner of the country, so much so that companies like FedEx, Ups also uses them to supplement their deliveries in hard to reach places. There are several more detailed challenges in the parent topics that I have mentioned and you are welcome to discuss with me directly if you would like to.
However talking about the challenges, the market is all set to grow at an exponential growth and is touted as one of the highest growth areas in the coming years.
