An e-commerce arms race is heating up in one of the Middle East’s most lucrative markets, with United Arab Emirates-based property holding company Emaar bidding against Amazon for e-commerce retailer Souq.com. Emaar, which owns properties including the sprawling Dubai Mall, announced that it was offering US$880-million for the Middle East’s biggest online retailer.
Emaar Malls PJSC’s bid for Dubai-based Souq.com was made public today, in a filing on the Dubai Financial Market. The document said the decision was made “in line with the strategy to align e-commerce with physical shopping.”
Emaar’s offer outbids Amazon’s alleged offer by some $230 million.
While news of a potential Amazon acquisition goes back months, an announcement by another local conglomerate, Alabbar, that it would launch its own online retail site, noon.com, seems to have lit a fire under the market. Backed by Saudi money, Alabbar’s investment in noon.com is reportedly $1 billion, with one source telling arabianbusiness.com that, “nothing is being left to chance”.
If Amazon Prime’s fast service is a tantalizing offer, local media have reported that noon.com will offer three-hour, door-to-door delivery on items, as well as “ground-breaking” return policies and advanced payment platforms.
These developments set the stage for a major e-commerce battle in Gulf markets, where e-commerce sales are expected to reach $70 billion within a decade.
Despite its promise, e-commerce penetration in the Gulf region is surprisingly low given the local population’s spending habits. Dubai residents still pack themselves into local shopping malls, much like Americans did during the late 1990s, suggesting that e-commerce disruption is right around the corner.
But while e-commerce could take a bite out of the region’s brick-and-mortar stores, malls command a unique centrality to local socio-economic life, given the lack of alternatives for mingling. This is especially the case in more conservative parts of the Gulf.