With online consumer activity set to spike across the MENA region during the religious festivals of Ramadan and Eid, Qatar is looking to encourage e-commerce, as part of a broader push to catalyse private sector development.
Shipping initiatives
At the end of May, Qatar Postal Services Company (Q-Post) slashed shipping charges by as much as 35% for customers using its “Connected” e-commerce service throughout Ramadan, in a bid to spur online retail during the annual gift-giving that marks these holidays.
Launched in April of last year, Connected provides users with an “international shipping address” allowing them to shop at select global retailers that ordinarily restrict shipping to Qatar, thus easing postal wait times.
Last Ramadan, online sales across the MENA region rose 18% during the fortnight ahead of the festival and peaked at 66% in the month’s third week, averaging out to a 51% rise over the entire period, according to an analysis by technology marketing firm Criteo.
Q-Post’s move is part of broader efforts to modernise the country’s mail system and spur e-commerce in response to market changes and shifting consumer habits.
In March it inked an agreement with Qatar Mobility Innovations Centre to develop a pilot for Tasleem, a new e-commerce platform, to support on-demand delivery services both locally and regionally. The partners are now working to finalise an initial platform, with the aim of a large-scale launch at a later stage.
The following month, Q-Post signed a deal with Turkish Post to develop a joint e-commerce platform to facilitate online shopping and shipping between Qatar and Turkey.
The Communications Regulatory Authority has meanwhile been working to create a business environment more conducive to e-commerce.
“We are already working on assessing the sector’s dynamics and how to balance policies and regulations, taking into consideration their impacts on service providers, over-the-top services, platforms and applications,” Mohammed Ali Al Mannai, its president, told OBG.
Growth potential
E-commerce in the Gulf has lagged much of the rest of the world, as the region’s retail space continues to be dominated by malls.
With estimated revenues of $5.3bn in 2015, e-commerce contributes just 0.4% of the GCC’s GDP, far below the 3% figure in comparable markets, according to a 2016 study by consultancy AT Kearney.
One reason for the slow uptake is that many consumers prefer to physically inspect and compare items before purchasing, according to Shamsuddin Olakara, chairman of Quality Group International.
“E-commerce offerings are also lacking from the retailers’ side,” he told OBG. “More diverse payment options should be introduced to enhance both customer satisfaction and security.”
Further obstacles to growth include regulatory challenges, poor payment and logistics infrastructure, security, and consumer trust, AT Kearney noted.
Nonetheless, the report added, given high personal income levels the GCC could become one of the world’s fastest-growing regions for e-commerce, with the potential to nearly quadruple online sales to $20bn by 2020.
This scope for growth has caught the attention of international giants like Amazon, which in March announced a deal to acquire Dubai-based online retailer Souq.com for at least $650m.
Moves to open the market to smaller-scale enterprises have also been made, and in early March the Qatari government launched the Qatar National E-commerce information portal. The platform provides the latest information on the e-commerce scene in Qatar, as well as tips, guidelines and best practices for enabling businesses to grow through e-commerce and for helping consumers to stay safe online. The stated aim is to help small businesses access global value chains through e-commerce.
ICT investment
Another positive sign for e-commerce growth is greater commercial use of technology. As Qatar-based firms become more aware of how technology can help grow their sales, total business spending on ICT is forecast to rise from $1.9bn in 2015 to nearly $2.8bn by 2019, according to a 2016 report by the Ministry of Transport and Communications.
Almost half of businesses surveyed for the report said ICT helped them access customers in new geographies and expand their potential markets.
“ICT underpins the growth of every industry in the 21st century,” Zong Yan, CEO of Huawei Qatar, a global telecoms & ICT company, told OBG. “We have observed in other countries such as China that there is a direct correlation between GDP growth and investment in ICT.”
Read More from OBG
