The State and Opportunity for E-commerce in the Middle East

When was the last time you bought something online from the Middle East? For many of us who are comfortable shopping online in general – and have also experience e-commerce in this region – the answers will range from rarely to occasionally. For many others the answer is never, or even more likely that there’s not really that much to buy online from/in the Middle East…what are my options?

The honest answer revolves around some variation of the fact that there really isn’t much to buy online in the region. I contend that the reason is not because those of us here don’t have credit cards, or don’t feel comfortable buying  online, but that there is a dearth of opportunities to buy online here and this is fuelled by the challenge in setting-up an e-commerce platform rather than the resistance from the consumer.

Why do I say that? Let’s look at some numbers in no particular order:

I’ll use an example that I know well: is one of the most-visited websites in the region with roughly 1.5+ million monthly unique visitors. One of the greatest sources of that traffic is the UAE. While Bayt does have an e-commerce element (job seekers and employers can purchase either CV services or recruitment services online respectively) it is not an e-commerce webstie per se. One would argue that it gets this much traffic because it is not an e-commerce website, since no one here uses ecomm and the site would get less traffic if it did. However, looking at Google trends shows us that gets more traffic from the UAE that People are shopping online from here to the other side of the planet in greater numbers than they are looking for new opportunities here. The Shop & Ship guys can attest to this. Similar-ish numbers hold true when comparing to The apples-to-apples comparison is that clearly there is a strong interest in online shopping from this region – even to the extent that people are willing to cross the hurdle of shipping fees and currency conversion to make that buy.

Recently I conducted some research on credit card usage in this region.

  • 80% of respondents have a credit card
  • 70% of respondents use their credit card for online purchases
  • 40% of respondents buy online once per month or more
  • 56% of respondents are somewhat to very comfortable buying online from Europe, 59% from North America, but with the largest group of respondents from the GCC and Levant saying that buying from this region just hasn’t even been an option
  • 49% of respondents site the chief reason for hesitation or lack of online shopping from this region is the lack of options
  • and when asked what would increase their confidence in buying online from the region 55% said trust that the site would run error-free, 53% said clear signs of audit and verification, and 50% said clear transparent customer care

When a similar question to the last was asked on that limited respondents to one answer:

  • 26% of respondants will always remain sceptics
  • but that means 74% of people are open to measures to increase that confidence – primarily to the tune of 27.5% agree with the need for clear signs of audit and verification (in other words, that the gateway looks and operates as it should and because someone else says it does)

So let’s round this out with what I can buy online here with a credit card:

  • airline tickets
  • hotel bookings
  • event tickets
  • flowers
  • CV services
  • recruitment services
  • auction items
  • anything else…?

Some preliminary conclusions are that:

  • people have credit cards – google the recent MasterCard info on credit card penetration in the region
  • people are shopping online – but primarily from outside the region
  • people are open to shopping online in the region given trust that the gateway will work, its safe, and that they can contact someone if there’s an issue
  • that there must be a huge opportunity for new e-commerce plays that are limited only by our imagination, initiative and implementation….


Go start an e-commerce site today based in the region and you’ll quickly find that the main issue is not your will, building a site, incorporating (could be easier and cheaper), or the consumer. The biggest challenge is the difficulty in securing an inexpensive – globally-leading – payment gateway.

Let’s compare regions:

UAE provider:

  • link-out only gateways – no API usage to integrate payment into a seamless experience for the user
  • choice of 2 gateway providers
  • serve all Middle Eastern markets including Egypt and Lebanon
  • ~$85,000 of collateral on account as a deposit with the merchant account provider (subtract from your operating capital)
  • $1,000 setup fee
  • $5,000 yearly maintenance fee
  • 3% and 2aed on every transaction

North American provider:

  • link-out or API gateways plus e-wallet services (can carry a balance on account to use later)
  • choice of many gateway providers
  • serve most all Middle Eastern markets, often not including Egypt and Lebanon
  • $0 of collateral on account as a deposit with the merchant account provider
  • $199 setup fee
  • $420 yearly maintenance fee
  • 2.6% and $0.25 on every transaction

You tell me which is easier for an entrepreneur to swallow at start-up? I understand that its difficult to setup internationally given the issues around residency and tax requirements, but this is an opportunity for making the local ecosystem more attractive for local and international entrepreneurs…

Oh can you imagine…..with a tax-free business climate, great central geography, access to existing and emerging markets, great weather, multicultural workforce, a fairly liquid environment…and combine that with a real interest in making it both easier to setup a start-up PLUS working with global payment gateways providers to maximize options for e-commerce start-ups and you end with even more reason to launch a tech start-up here.

What’s your experience as an online consumer or trying to enter the ecommerce space in the region?

  • Gurshinder Singh

    well written mate,I like the research part. I think this is most fundamental problem of eCommerce in this region.

  • Mahmoud Abu-Wardeh

    Another major factor is the lack of door delivery postal services. The only real option for vendors is to use courier services for delivery (even for in-country deliveries in countries such as the UAE) which drives the costs up significantly.

  • hassan mikail

    Nice one D Man. Nice one. Still loads to be done on the e-commerce front in this region for sure!

  • Mashfique

    I am a regular on Ebay. I don't trust Souq at all, with regards to the sellers on it as well as buyer protection policies.

  • Tomislav Bilic

    Hello Dan,

    This is a great article. Definitely gives good insight in the UAE eCommerce customers behavior. Thanks.

  • jayjee

    Hi Dan,

    What you say could be true with the rest of the ME/Gulf with the exception of Saudi, where I believe the problem is not as severe.

    Most everyone is aware of the SADAD payments system that was established by SAMA back in October 2004, as the national Electronic Bill Presentment and Payment (EBPP) service provider.

    The core mandate for SADAD is to facilitate and streamline bill payment transactions of end consumers through all the channels of the Kingdom’s Banks.

  • Anas Shanti

    Great article Dan..

    E-commerce in the Middle East is a big challenge, yet i firmly believe that if was successfully implemented it will be a huge business, i guess with hard work creativity; it’s potentially doable.

    A year ago i have decided to create an eCommerce platform with a new concept for this region, and now we have the first online marketplace for e-storefronts in the middle east called Dokkankom (YourStore)

    Local retail stores and product distributors will be able set-up their own eCommerce storefronts using dokkankom in minutes free of charge and with a built-in e-store admin management tools they can control their orders, inventory, sales and delivery, this is ideal for new and existing businesses to have a virtual eCommerce store that costs nothing! which will also act as marketing tool.

    Now.. as for the payment gateway, all stores will be using our integrated international and trusted payment gateway and with some magic, payments will be processed to stores local bank accounts securely. we are now planning to allow merchants to choose between payment gateways so they can fully control and monitor all their transactions seamlessly, our successful transaction percentage is extremely competitive.

    Using the platform you can also search for services available in your local area, service companies will be able to set-up their own free page online which they can fully control where they can add and promote their services.

    This online platform has many other major features that are currently being built and will definitely change the way people look at eCommerce in this region.