Amazon Middle East: Opportunities and Challenges for Chinese Sellers
Amazon Middle East is an e-commerce platform established by Amazon in the Middle East region. Through the acquisition of local e-commerce company Souq.com, Amazon successfully entered the Middle East market.Since its establishment, Amazon Middle East has rapidly expanded its business scope and brought convenient and diverse online shopping experiences to consumers in the Middle East, as well as providing a high-quality path for Chinese sellers to enter the Middle East market.This article is the fifth in the "Middle East Business Economics" series of the China Arab Industrial Research Institute, which provides an in-depth introduction to industrial policies, laws and regulations, industry trends, market demand, competitive landscape, and potential transaction opportunities in the fields of investment, trade, and engineering construction between China and Arab countries.
1. The history of Amazon's Middle East marketIn 2017, Amazon decided to enter the Middle East market and used the acquisition of Souq.com as a starting point. Souq.com, founded in 2005 and headquartered in Dubai, is one of the largest online retail platforms in the Middle East. Amazon's acquisition has brought new vitality and opportunities to the e-commerce market in the region.
In 2019, Amazon renamed Souq.com as Amazon. ae and began offering Amazon's products and services. This measure marks Amazon's official entry into the Middle East region and brings a shopping experience similar to that of the global Amazon platform to local consumers.
In 2020, Amazon Middle East Station acquired Türkiye's e-commerce platform Trendyol.com, further expanding its market share in the Middle East. This measure strengthens Amazon's logistics network and partnership in the Middle East, providing faster and more efficient delivery services.
In 2021, Amazon Middle East launched the Prime membership program, providing subscribers with free delivery, membership exclusive discounts, and other services.
This measure further increases the attractiveness of Middle Eastern consumers to Amazon Middle East and enhances the user experience.At present,
Amazon Middle East has four stations, namely Amazon.ae in the United Arab Emirates, Amazon.sa in Saudi Arabia, Amazon.eg in Egypt and Amazon.com.tr in Türkiye.
The best-selling products on Amazon Middle East include:
(1) Electronic products: various electronic products, such as televisions, laptops, smartphones, and tablets;
(2) Fashion: Various men's, women's, and children's clothing, shoes, and accessories
(3) Home and kitchen: various household appliances, furniture, and home decor
(4) Grocery: Various miscellaneous items, including fresh agricultural products, meat, dairy products, and baked goods.(5) Sports and Outdoor: Various sports equipment, camping equipment, and outdoor clothing.
The emergence of Amazon Middle East has had a profound impact on the e-commerce market in the Middle East region.
Firstly, Amazon's entry has provided Middle Eastern consumers with a wider range of product choices, covering multiple categories such as electronics, household goods, fashion clothing, books, etc. This provides local consumers with more shopping options and enriches their shopping experience.
Secondly, the development of Amazon's logistics network and partnerships in the Middle East has made delivery more convenient and fast. Consumers can enjoy fast and reliable delivery services, which has accelerated the development of the e-commerce market in the Middle East.
In addition, the launch of the Prime membership program on Amazon Middle East has also improved the user experience. Members can enjoy privileges such as free delivery and membership exclusive discounts, further attracting more consumers to join Amazon's ecosystem.
2. Amazon's current presence in the Middle East
(1) Amazon UAE StationAmazon.
ae is the official Amazon marketplace in the United Arab Emirates. It was launched in 2019 and offers a variety of products from different sellers, including products from local businesses and international brands.
Amazon's UAE website achieved online revenue of $496 million in 2022, with an average monthly traffic of 10 million and over 5 million registered users. Amazon has two operational centers in the United Arab Emirates, located at Jebel Ali in Dubai and KEZAD in Abu Dhabi. Amazon delivers its products to customers in the UAE through logistics partners, including Aramex, UPS, and DHL.
The Amazon UAE site remains a relatively new market and is growing rapidly. In 2022, Amazon's online sales increased by 30% year-on-year. Amazon's UAE site is investing heavily in infrastructure and logistics capabilities, and expanding its product selection.
(2) Amazon Saudi StationThe Amazon Saudi website Amazon.sa was launched in 2019, becoming the second Amazon marketplace in the Middle East after Amazon.ae. This website is localized for the Saudi Arabian market, offering a variety of products from local and international sellers.
Amazon Saudi Arabia's online revenue reached $340 million in 2022, with an average monthly traffic of 8 million and over 4 million registered users.Amazon has one distribution center in Riyadh, Saudi Arabia. In 2022, Amazon's online sales increased by 25% year-on-year.
(3) Amazon Egypt StationThe Amazon Egypt website Amazon.ag was launched in 2021, becoming the third Amazon marketplace in the Middle East after Amazon.ae and Amazon.sa. This website has been localized for the Egyptian market, offering a variety of products from local and international sellers.
Amazon Egypt's online revenue reached $220 million in 2022, with an average monthly traffic of 6 million and over 3 million registered users.Amazon has one distribution center in Cairo, Egypt. In 2022, Amazon's online sales increased by 40% year-on-year.
(4) Amazon Türkiye StationAmazon Türkiye launched Amazon.com.tr in 2022, becoming the fourth Amazon mall in the Middle East after Amazon.ae, Amazon.sa and Amazon.eg. The website is localized for the Türkiye market and provides various products from local and international sellers.
Amazon Türkiye expects online revenue of $100 million in 2023. The current average monthly traffic is 4 million, with over 2 million registered users.Amazon has 1 distribution center in Istanbul, Türkiye. In 2023, Amazon's online sales are expected to increase by 50% year-on-year~
Opportunities and challenges for local people
in the Middle East marketAmazon has created many opportunities for sellers in the online market in the Middle East. These include:
(1) A vast and constantly growing marketA region with a large and growing population in the Middle East. In 2022, the estimated population of the Middle East is approximately 450 million people. It is expected that this population will grow to around 550 million by 2030. The population growth in the Middle East is driven by factors such as urbanization and economic development.
The Middle East is a fast-growing market with a large population and increasing Internet penetration. By utilizing Amazon's platform, Chinese sellers can reach millions of potential customers in countries such as the United Arab Emirates, Saudi Arabia, and Egypt. This has opened up new avenues for business expansion and revenue generation.
(2) Lowering entry barriersAmazon's Middle East online market has lowered the entry threshold for sellers. This is because Amazon provides a platform that allows sellers to reach a large number of potential customers without establishing their own website or logistics infrastructure.Amazon has invested heavily in establishing a strong logistics and fulfillment network in the Middle East. Sellers can utilize Amazon's infrastructure to store inventory, efficiently fulfill orders, and ensure timely delivery to customers in the region. This helps to overcome logistics challenges and enhance the overall customer experience.
(3) Cross border trade opportunitiesAmazon's online market in the Middle East provides opportunities for cross-border trade. This means that sellers can sell their products to customers around the world without actually shipping the products to that region.Selling in Amazon's Middle East market enables sellers to diversify their sales channels beyond traditional markets such as Europe and America. This diversification strategy helps to mitigate the risks associated with excessive reliance on a single market and provides growth opportunities for undeveloped markets.
However, sellers have an advantage in selling in the Amazon Middle East online market.
These advantages include:
(1) Competition from sellers from other countriesThe number of local sellers on Amazon's Middle East online market is constantly increasing. This means that sellers need to be competitive in terms of price, quality, and customer service.
(2) Language barrierThe Middle East is a multilingual region. It is difficult for sellers who do not speak Arabic or other local languages, as locals have an advantage.
(3) Cultural challengesIt is crucial for other sellers to enter the Middle East market without understanding local customs regulations, adhering to cultural sensitivity, and having a product list to meet the specific needs and preferences of consumers.
(4) Logistics challengesThe Middle East has a vast territory and diverse logistics challenges. This makes it difficult and expensive to transport products to the region.Overall, Amazon's online market in the Middle East has created many opportunities for local sellers. However, local sellers also need to be aware of some challenges.
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