The evolution of the Middle East’s digital commerce landscape over the last few years is nothing short of remarkable. While the region may have traditionally lagged behind other geographies in terms of its ecosystem maturity, there has been a fundamental step-change in the way that local governments, businesses, and consumers view online marketplaces. The COVID-19 pandemic spurred some of this change, of course. But the gears were already churning.
We’ve seen this firsthand leading into 2022. Checkout.com’s annual report of the Middle East, North Africa, and Pakistan (MENAP) region has tracked the evolution of the eCommerce and digital payment scene for several years now. As we look to the period ahead, it is worth revisiting a few of these trends in more detail.
eCommerce is more than a temporary change – There were questions in the immediate aftermath of COVID-19 about whether the digital shift would endure post-pandemic. The answer is an overwhelming “yes”. More than half (53%) of consumers in the region say that they are doing more of their shopping online now compared with before the COVID-19 pandemic started. That’s a rise from 45% of consumers in 2020. Approximately 83% now say that they’ll maintain or even increase their current level of eCommerce spending into 2022, suggesting an irrevocable shift in consumer behaviour.
Cash is ditched as trust in digital payments rises – The first chapter of the region’s eCommerce journey was marked by a widespread cash-on-delivery payment culture. This hindered the broader digital transformation of retail. Fast forward to today and many Middle East consumers are ready to ditch cash. Approximately 60% of consumers in the region are choosing to pay for eCommerce via a digital payment method – a 20% increase in 2021 compared to 2020. Three in four (76%) consumers in the region also report using some form of fintech app in 2021, which is nearly on par with the average of consumers across APAC (80%). If this trend holds—and we expect it to—2022 could herald the onset of a truly cashless society in the Middle East.
Apps start to dominate digital commerce – The online card-payment model barely had time to settle before mobile apps took the reins. Our latest research shows that nearly half (48%) of online consumers across the region now prefer apps to purchase products or services, with many bypassing traditional online methods on a laptop, desktop, or even mobile browser. The integration between mobile wallets, apps, and social media channels is certainly a business imperative for merchants in 2022.
Social media and conversational commerce – Smart brands are now ramping up their innovation to cater to consumers’ ongoing search for personalisation, convenience, and human-centric customer service. As a consequence, more retailers in the region are connecting with customers via WhatsApp and other social media platforms, giving rise to “conversational commerce”. Our data reveals that social channels have really boomed as a favorite channel for consumers to shop within. Even traditional offline retailers with no digital presence have started to list products on platforms like Facebook and Snapchat, while conducting transactions on WhatsApp. A fifth (20%) of consumers in the region now say that they most frequently shop online within a social media app – compared with 8% of consumers in a market like China. Being able to offer the right payment options in-channel in 2022 will be critical to tap the emerging opportunities available to merchants.
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The (still) untapped potential of buy now, pay later – A short three years ago, few people had heard of buy now, pay later (BNPL). Today, this model is one of the dominating commerce trends in the world. In fact, BNPL has soared with greater penetration across MENA than across Europe in 2021. Almost a quarter (24%) of consumers in the region used a BNPL option last year. The rapid growth of companies like Tamara showcase this maturing of regional BNPL innovators. As the first BNPL company to be enrolled in the Saudi Central Bank’s sandbox program, it only launched in 2020, but has since set a record series A and B funding rounds—the latest totaling $110 million of investment.
When combined with the heft thrown behind the digitisation of the region’s economy, record levels of investment in digital start-ups, and a more robust regulatory environment for fintechs, these trends are certainly ones to keep an eye on as the region maximises the eCommerce growth opportunity in 2022.
