Demand for online retail bolsters Qatar's e-commerce market

 

Home to some of the most elaborate shopping centres in the world, it is unsurprising that Qatar and the wider Gulf region has traditionally lagged behind the rest of the world in terms of embracing e-commerce. However, in recent years the country has sought to change this by introducing a series of measures to encourage the growth of online retail. In October 2019 the government launched Theqa, a non-profit e-commerce platform that aims to improve consumers’ awareness of and confidence in online retail by certifying participating companies, while also providing stores with a reliable way to reach potential clients. In order to obtain certification, retailers must show that their website meets Theqa’s safety and security requirements, ensuring that their services are of a high standard.

The platform will help to provide clear information about consumer rights and terms and conditions of service. It is hoped that this will encourage Qataris to trust the local e-commerce segment, rather than opting to use international websites.

Dynamic Market

Online shopping is gaining popularity and significance in Qatar, driven by the country’s young, tech-savvy population and large number of expatriates, who often already have experience shopping online in their own countries. Climatic and cultural factors have traditionally made visits to air-conditioned shopping malls an important part of social life in Qatar. However, Qatari consumers are among the world’s most technologically inclined, and attention is increasingly focused on how best to provide shoppers with a digitally enhanced combination of affordability and convenience. Safe in the knowledge that the societal importance of shopping malls will protect brick-and-mortar outlets if e-commerce causes a fall in demand for physical stores, Qatar’s retailers are adjusting to the change rather than resisting it by introducing virtual, online fitting rooms on their websites using augmented reality and offering a range of delivery options. In line with local preferences, most retailers in the Gulf avoid online transactions by offering cash payment on delivery.

The success of online retail in other markets around the world demonstrates the potential for the local e-commerce segment to expand. The proportion of purchases made online in the US increased from 6.4% in 2010 to 16% in 2019. Online shopping in the Gulf region was given a considerable boost in 2017, when Amazon purchased Dubai’s Souq.com, the largest online retailer in the GCC, for $580m.

Changing Situation

The e-commerce segment received an unexpected surge in demand in early 2020 amid the global outbreak of Covid-19, which led to an increase in the use of home delivery services as physical stores were temporarily closed.

In March 2020 retail giant Amazon announced that it would be recruiting 100,000 new employees to cope with the rise in volumes of online purchases. This suggests that the pandemic will have a lasting effect on retail markets around the world, as both supply and demand adapt and online purchases become more commonplace. However, it is anticipated that there will be a short-term decline in demand as the economic effects of the crisis impact consumers’ spending power. In March 2020 the government unveiled a QR75bn ($20.6bn) financial incentive package designed to shield the private sector from the effects of the Covid-19 crisis and the suspension of flights from Doha’s Hamad International Airport. That same month the Qatar Central Bank also introduced measures encouraging banks to postpone loan payments for six months.

In light of these events, Theqa’s launch appears timely, both in terms of providing a boost to the nascent e-commerce segment and more broadly in terms of providing an essential service as the authorities take steps to slow the spread of the virus.

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