In most markets, e-commerce is among the first industry to grow. Then comes the age of FinTech to support e-commerce and other industries to grow even further.
While FinTech startups and investments have been growing and overtook the number of total investment deals in 2018 with 43 fundings, and crossed 41 deals in H1 2019, according to MAGNiTT, the deal sizes of e-commerce have been far larger.
This goes to prove that while FinTech is growing quickly, e-commerce continues to grow bigger, with Amazon and noon competing for market share and niche e-commerce startups carving out a space for themselves.
A new study by Dubai Economy and Visa, said that the UAE is the most advanced e-commerce market in the MENA region; projecting that the total e-commerce transactions in the country could reach $16 billion in 2019.
The study also said that the transaction size would grow at 23 percent on average until 2022.
Coming down to individual transaction size, the study said that the UAE is doing better than emerging as well as mature markets, with an average e-commerce transaction being USD 144. For comparison reference, emerging markets see USD 26 in average transaction size while it is USD 79 in mature markets.
"We are particularly buoyed by the policies of the government that encourage innovation on a level playing field and through open dialogue. In addition to e-commerce, we are also working with our government partners on growing mobile and contactless payments.”Marcello Baricordi, general manager of Visa in the MENA region
The Middle East’s first major exit was Souq.com that earlier this year completed the migration process to launch as Amazon; which in turn launched Prime membership offering Prime Video service, essentially growing its customers. At the same time noon introduced free delivery without any minimum order amounts. Beyond that, niche ecommerce platform Sprii raised $8.5 million, one of the top funding of H1 2019. All these are indicatives of the growing market.
Moreover, there is growing penetration of the internet and smartphones in the region, as well as growing number of retailers taking to the platforms to grow their business.
However, it is not just retail platforms such as Amazon, noon, Sprii, Mumzworld and such that fall under e-commerce. The umbrella covers food delivery services (one that is becoming heavily saturated), car rental services such as UDrive, Ekar, and the soon to be launched Urent, as well as ride hailing services such as Uber, Careem, Circ, and more. Their growth also plays a factor into the growing market.
There have been more e-commerce startups that have recently launched in other industries as well, which are bound to add to the industry growth, such as Trello and Tenderd. As the economy moves towards digital platforms, and tech startups and SMEs plug more gaps in the market, we could see the industry grow further.