Noon is latest e-commerce site to launch: will traditional retail survive?

With the launch of the much-awaited Noon.com, the Middle East’s largest online shopping platform, the online retail landscape in the Gulf is on the verge of experiencing a major paradigm shift.

It’s no secret that the launch of the ecommerce goliath, founded last year by Emaar Properties Chairman Mohamed Alabbar, and the presence of Souq.com, the ecommerce powerhouse that was acquired by the US online shopping giant Amazon in March this year, will cause a huge disruption in the UAE and the Gulf, both online and offline.

Amazing race

Thanks to landmark moves such as these, the ecommerce sector in the region is quickly picking up pace.

“This is an exciting time for ecommerce in the region. With Souq.com recently being purchased by Amazon and with the launch of noon.com, we will surely witness a race towards faster shipping, friendlier customer service and easier returns, all to the benefit of GCC consumers. Noon.com is already promising that items will be delivered a whopping three hours after being purchased online,” says Alexis Lecanuet, Managing Director, products lead, Middle East and North Africa, Accenture Consulting.

But what happens to regular, traditional retailers? Lecanuet, for one, believes that the advent online giants on the Gulf e-commerce landscape doesn’t mean it’s the end of traditional brick-and-mortar retail.

“Physical stores will have to now find ways to differentiate themselves and hold on to what makes them unique. More significantly, the road to success will lie in understanding their customers’ needs and adapting their approach accordingly. It’s an end-to-end experience,” he notes.

“Let’s not forget that brick-and-mortar stores can provide a personalised customer experience and a human touch that is still preferred by many consumers. The key to success may lie in finding the perfect synergy between offline and online experiences,” he explains.

Baby steps

Having said that, there is still enormous room for growth in the region and, despite the presence of behemoths such as Noon and Souq, smaller players still have a lot of space to conquer – and it may yet turn out that there is enough for everyone.

A report by ATKearney, titled Getting in on the GCC E-Commerce Game, reveals that the Gulf region’s e-commerce market is surprisingly very small. With an estimated market size of $5.3 billion in 2015, e-commerce contributes only approximately 0.4 per cent to the region’s GDP – a miniscule amount compared with more mature markets that have similar levels of GDP per capita and Internet penetration.

But there is scope for growth: “With much of the groundwork in place, the region is on the edge of becoming the world’s fastest growing e-commerce playground. Traditional retailers that shake their inertia can capture substantial benefits,” the report notes.

So it’s up to the region’s retailers, big and small, online and offline, to embrace the digital bandwagon, redouble their efforts to reach customers and take the region to global heights.

– By Sunil Kumar Singh 

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