Retail onlification takes MENA by storm


Written by  Wijnand Jongen ( / Ecommerce Europe)

Ecommerce Europe executives travel to see and learn what’s happening around the world. I wrote this blog post as a preparation for my upcoming trip to the Oman E-Commerce Conference (OEC2019) in Muscat – Oman on September 16th & 17th.

When being online was new, the retail business model did not really need to adapt. The webstore was simply a digital storefront. Not so today. The here (analogue, offline) and there (digital, online) is merging to become one onlife experience. This is a phenomenon called ‘onlification’. Every aspect of life has changed, from online banking, or using social media, to booking a ride-share app, checking Google Maps and more. Consumers are online all the time, wherever they go, on various devices.

According to a 2018 report by Bain & Company (in partnership with Google), retail in the Middle East and North Africa region is on the verge of a pivotal shift. In other parts of the world, going digital happened slowly: consumers first, then businesses. Not so in MENA, where mass adoption of internet has been swift and exponential. Smartphones, social media and faster internet speeds all meant consumers were largely online by the mid-2000s, with the GCC countries leading the way. A dramatic shift: digital media across the region went from 10% in 2012 to over 30% by 2017.

The future of retail

CEO of Chalhoub Group, Patrick Chalhoub observed, wisely: “This is not about digital transformation, it is about transformation, period.” New business models and new customer experiences are on the horizon. TJ Lightwala, of Mindshare MENA, says changes are significant because consumers traditionally favoured a more physical retail experience and were sceptical of online payments. Large tech companies and the increase in webstores for electronics and clothing have paved the way for change. Amazon acquired Souq, the region’s largest online retailer, in 2017 for $580 million. Mohammad Allabar launched noon in 2017 too, a new e-commerce venture that has since joined forces with eBay.

Developments in technology have opened up new markets and provided billions of people with opportunities to improve their lives. The Legatum Prosperity Index — an independent index measuring wealth, economic growth, education, health, personal wellbeing and quality of life — says the world has never before been in better shape. By 2020, almost 5 billion people are predicted to be connected through the Internet: truly a global village.

Tech giants are the global marketplaces and platforms, such as Amazon and Alibaba, and their regional counterparts and partners. Newsweek once called the founder and CEO of Souq, Ronald Mouchawar, “the Middle-East’s Jeff Bezos.” These companies took full advantage of the Internet and digitization, shaping the new reality to fit their own specifications. Already, we can see that retail platforms in the MENA region need to partner up with them: Souq and noon, most notably. The true threat for the open market and free trade is that platforms are monopsonies within the retail value chain. A monopsony basically forces others into being dependent: if retailers want to be found, or want to do business on a global scale, they have no way of avoiding these platforms.

Customer journey redux

Big data, artificial intelligence and other technology are turning retail upside down. The question is not if the consumer is ready, but: can the retailer make it happen? The onlife consumer has high expectations of the retailers they purchase from. Retailers need to tap into all the options tech has to offer them. For example, Amazon basically invented sales promotions like “Black Friday”. In the MENA region, smart retail entrepreneurs have copied some of these ideas and come up with “White Friday” promotions. Similarly, regional online retail giants like noon have taken the lead in special discount codes for Eid (Eid Al Fitr). Promotions were always part of the customer journey. Now, technology allows retailers to use data to analyse all aspects of consumer behaviour.

Know your consumer or miss out

In 2018, Bain & Company described consumers being heavily influenced by their online activities. MENA customers spend the majority of their purchasing journey online, regardless of where they buy. Some 48% of UAE/Egypt/KSA consumers get ideas online, compared to only 27% in the UK. Shoppers in the UK do end up buying online more frequently (47% compared to 12% in MENA). Another interesting fact is that around 20% of MENA shoppers watch videos for brands and products before buying (only 7% do so in the UK). Video is huge, video is a must. Retailers who are unaware of such consumer behaviour will miss out on key opportunities.

MENA consumers are mobile first, smartphones the preferred method for online search and shopping. Retailers need to ensure their webstore interface is responsive and meets the standards of consumers. MENA region retailers can take the advice of Jack Ma, of Chinese Alibaba, when considering what onlife means for them. It is the ultimate strategy of Alibaba to transform retail based on an integration of online, offline, logistics and data. “We want to create a new economy where the online world is integrated with the physical world,” Ma explains. “We’re building an economic entity — a virtual economy on the Internet.” Now that’s an idea any retailer should want to get behind.

The Oman E-Commerce Conference (OEC2019) takes place in Muscat – Oman on September 16th & 17th.