There are apps for whatever you need, whether a pint of ice cream, a shawarma, or a dress. Almost anything can be delivered at the touch of a button—sometimes within less than ten minutes.

Online shopping has changed the way people in the Middle East shop.

It started in 2005 when Souq was launched in the UAE, which soon became the largest e-commerce platform in the region. In 2017, Amazon acquired it. Since then, many platforms, such as Noon, Namshi, and Talabat, have pushed boundaries, fulfilling the demand for a thriving online marketplace by delivering everything from restaurant food to fashion brands.

The COVID-19 pandemic has also played a significant role, as lockdowns sent people online for groceries for the first time, forcing traditional sellers to go digital to stay afloat. It also prompted a wave of new e-commerce enterprises trying to take advantage of the sudden demand.

A Deloitte study revealed that e-commerce in the Middle East is poised for substantial growth. It is estimated to reach a market volume of $50 billion by 2025, driven by cutting-edge technologies and favorable government initiatives to promote digital economies. 

“The Middle East digital marketplace will need to offer a seamless, localized experience across multiple countries, robust logistics, and a wide range of products that cater to local preferences. The key will be balancing global best practices with local needs and preferences,” says Asif Sabir, Chief Technology Officer of GoBazaar.

OVERCOMING CHALLENGES 

Setting grounds for a digital marketplace in the Middle East has its own unique challenges. First is regulatory complexity, as different countries have varying regulations, making creating a unified digital marketplace hard.

Trust and security are another obstacle. Consumers are concerned about online payment security and data privacy, which can hinder adoption and complicate logistics and cash flow. 

Additionally, the region’s diverse geography makes last-mile delivery and logistics a significant challenge. Experts say a one-size-fits-all approach may not work in the region’s culturally diverse landscape, and varying levels of digital literacy also affect the adoption of digital marketplaces. 

The possible resolutions, Sabir says, could include partnering with local entities to navigate regulations and build trust, offering multiple payment options, including digital wallets and installment plans, investing in or partnering with efficient logistics providers, educating consumers about the benefits and security of digital marketplaces, and implementing strong security measures and communicating them clearly to users.

A shift from a protectionist approach to one of collaboration and openness is crucial in the evolving digital landscape.

“The region should emphasize creating compelling, locally relevant content that resonates with our target audiences,” says Ramzy Abouchacra, MENA Media Practice President at Dentsu. “Success in establishing a digital marketplace in the Middle East hinges on building strong trust and collaborative relationships between publishers and the platforms.” 

According to Sabir, the Middle East can stand out with its unique offerings, such as products and services that cater specifically to the region’s cultural and religious practices, including halal-certified goods.

Localized payment options, integration of Arabic language support, cross-border trade within the region, and region-specific promotions, especially during significant cultural events like Ramadan, will also help.

EMBRACING TECHNOLOGY

Online marketplaces are experiencing a surge in sales while technology advancements and adoption have increased. They leverage big data to better understand consumer behavior, optimize inventory, and forecast demand.

Advancements in logistics technology, such as automated warehouses, are helping to solve last-mile delivery challenges, while the rise of digital wallets and other fintech innovations is making it easier for consumers to make payments.

Artificial intelligence (AI) and machine learning enable personalized shopping experiences and more efficient operations, while augmented reality allows virtual try-ons for fashion and home decor items. 

Blockchain is being explored for secure transactions and supply chain transparency. 

Despite this, Abouchacra says that the region still needs to catch up in terms of competing with globally established platforms. “Our focus should be on how we can effectively adopt and localize these technologies within the frameworks of global leaders. A critical factor in this journey is gaining and maintaining advertisers’ trust, especially concerning the responsible collection and use of first-party data.”

“By proving our capability to manage first-party data effectively and ethically, we can create more targeted and impactful campaigns, ensuring that we remain competitive and relevant within the evolving global digital marketplace,” he adds.

Fast Company Middle East’s Next Big Things in Retail Summit, which will be held on November 12 in Riyadh, will cover key topics in retail, such as experiential retail, traditional store optimization, and e-commerce strategies like social commerce and hyper-personalization. It will also discuss how design and innovation will play a role in reshaping the retail landscape.

Delegates can register here.