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Digital commerce makes up less than 1% of GDP in Middle East

Region sees double-digit growth in consumer use of digital channels, but businesses seem reluctant to get involved

Digital channels are increasingly being used by consumers in the Middle East, but because of business reluctance, digital commerce accounts for less than 1% of the region’s gross domestic product (GDP).

According to Gartner, the Middle East has seen double-digit growth in the use of digital channels and it predicts that this growth will continue. But unless businesses get in on the act, e-commerce will not increase its contribution to the region’s economic growth.

There are important opportunities in digital commerce for countries in the Middle East as they diversify the sources of their wealth away from a heavy dependence on oil, and Gartner called for more active participation by businesses to grow digital commerce in the region.

The IT analyst company said limited product ranges online and a lack of participation from businesses were obstacles to future growth.

Gene Alvarez, managing vice-president at Gartner, said that despite close to half the population in some leading Middle Eastern countries shopping online, digital commerce accounted for a much lower share of GDP compared with countries such as the US, the UK and China.

“Today, only 15% of the businesses in the region have an online presence, and 90% of online purchases are bought from outside the region,” said Alvarez. “With leading digital commerce players investing in product offerings, logistics and payment, along with supporting government initiatives, the Middle East will see strong growth for digital commerce in the coming years.”

Investments are being made with marketplaces such as Souq, Namshi and MarkaVIP investing in digital commerce. Governments in the region are also active in making services available online and supporting digital payments through rregulation.

But Gartner said there was still not enough participation in digital commerce by businesses. “This is partly due to the early nature of the market, and partly due to the lack of business awareness in using digital commerce as a new way to reach and engage customers,” said Sandy Shen, research director at Gartner.

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