“There has never been a better time to be an e-commerce startup in the MENA or African market. Business confidence is at an all-time high”
You may have noticed similar headlines and quotes in the media lately, speaking about the potential and the opportunities of running an ecommerce in the Middle East & North Africa (MENA) region. The short and obvious answer is that ecommerce has significant potential in markets such as Saudi Arabia.
In this article, we look at the specifics of online advertising in Saudi Arabia, stating important statistics, exploring trends and shifts in the recent years, exploring the value of platforms such as Facebook and Instagram in this transition.
We will also delve further than the Amazon.com acquisition of Souq.com and the consecutive onboarding process of adding more Amazon native products to the Souq.com portfolio. You should also look at the big retail groups in the region working on digital transformation; companies such as Al-Tayer, Alshay’a, and others.
Potential For Ecommerce In KSA
In 2016, which is the latest available data, the number of online buyers in KSA reached a total of 12 million users. The growing number of online buyers is helping expand the online shopping in KSA and is expected to have a positive impact on ecommerce in general across the country.
The biggest group of online buyers have a monthly income between USD 533 to USD 1,065, accounting for 24 percent of users. The USD 2,666+ per month is the least concentrated making up just 10 percent of the online population in KSA.
Finally, there is an interesting trend visible in the preferred payment methods statistics. Cash on delivery and credit cards are the most prevalent. At the same time however, fintech services are on a huge growth and solutions like Fawry, Masary and AliPay are expected to make a huge impact on the online shopping behavior in the coming years.
Channel Most Suitable To Explore Potential
Historically, performance/ direct response advertising was always connected to Google AdWords and Twitter. In the past three-four years, shifts started emerging; from the drop of Twitter global active users and the decline in their advertising platform investments, to the change of preferred devices, moving from desktop to mobile.
There is also a considerable rise of new channels such as Facebook, Instagram, Snapchat, and Influencer marketing. These are all game changers when it comes to push advertising and demand generation.
However, considering that each of these channels have their pro’s and con’s, you should ask yourself these questions, to decide which channel is the most suitable for you:
o Does this channel have ecommerce specific solutions?
o Is there enough inventory to secure a good reach?
o Is it trackable and can you measure performance?
o Is it scalable? Will it grow with my business?
o Is it effective in terms of ROI?
o Does it provide support to help you solve any issues?
What Are The Challenges?
The Facebook planners and engineers have been working on two primary challenges –– how to increase the Facebook family active users and reach inventory, and how to improve the Facebook advertising tools so that they can help drive business growth even better.
In doing this, Facebook has managed to launch several features to help business scale using online advertising, or more specifically direct response advertising
Adapting to change isn’t easy. We rather believe those same old ways should work forever as they have proved good performance earlier, albeit on a smaller scale. Facebook is trying to help you overcome this challenge and help advertisers to grasp the concepts, using Facebook Blueprints. However, concepts aren’t everything. You need to get hands-on best practices, and you need ways to unlock the infrastructure puzzle.
Facebook is working on a few ways to make it less puzzling, and in doing so they have come up with a program called Facebook Marketing Partners, which includes ROI Hunter. ROI Hunter, in cooperation with the Facebook MENA office and the Facebook Marketing Partners team in fact, managed to create a new program, built specifically for the Saudi market, called the Saudi Acceleration Program.
In short, there is significant potential in the Saudi market, and the industry is creating tools and platforms to assist companies in leveraging these opportunities.