Saudi Arabia is next battleground for e-commerce titans

Shoppers take a stroll through Riyadh's Kingdom Centre Shopping Mall. The Kingdom is being targeted by global e-commerce corporations. (Getty Images)
Updated 18 May 2018
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Saudi Arabia is next battleground for e-commerce titans

  • KSA online sales expected to surge to $13.9 billion by 2021
  • Overall GCC e-commerce to grow to $24 billion by end of decade

The battle for Saudi Arabia’s online shoppers is on.

One year on from the Amazon-Souq deal, the Kingdom's youthful population is being increasingly targeted by the region's burgeoning e-commerce industry.

With the largest economy in the GCC and the youngest Internet-connected population in the world, the Kingdom represents a golden goose for the world’s online retail players.

Online sales in Saudi Arabia are expected to surge to $13.9 billion by 2021 from about $8.7 billion in 2017, according to market researcher BMI.

The overall GCC e-commerce market is now tipped to grow to $24 billion by the end of the decade, say management consultancy A.T. Kearney.

UAE-born Souq.com, which was acquired by Amazon in 2017, has already built up a following and brand relationships in Saudi Arabia since its launch in 2005.
After months of delays, Noon.com also launched in the Saudi market in December last year, after starting up in the UAE earlier in the year.

Investors in Noon.com, including Emaar chairman Mohamed Alabbar and Saudi Arabia’s sovereign wealth fund, have put $1 billion into the project.

Saudi Arabia offers great scope for retail players looking to expand said Sam Blatteis, CEO of The MENA Catalysts and ex-Google head of Gulf government affairs.

As he puts it: “The Kingdom’s population has already expanded 50 percent since the start of the millennium, and has the highest YouTube and Twitter usage on earth. At this point, the pace of change has never been this fast, and yet it will never be this slow again.”

He said: “Tech titans from the world’s two largest economies – China and Silicon Valley – are signaling they plan to expand in Saudi Arabia. The Kingdom’s 2030 vision is only 12 years away and Saudi’s ‘Generation Y’ leadership is increasingly running the country. They are moving mountains to overhaul strategic industries from transportation to education legalizing ride-hailing apps to rolling out coding classes in schools nationally.”

As competition heats up in the marketplace and more players join the fray, trends will lean to specialization, said Monica Peart, senior forecasting director at E-Marketer.

“As more local e-commerce players arrive on the scene, you will start to see price competition and product competition. They will start to specialize, which will engender even more e-commerce activity,” added Peart.

But for e-commerce to really take off in Saudi Arabia and the wider GCC, shoppers “must be able to find better goods online than on the local shelves," said Peart.

She added: "For this scenario to become a reality, the region will need to ramp up its last-mile services, time-to-delivery, online ranges and its choice of payment gateways."

According to Walid Mansour, managing partner at Middle East Venture Partners (MEVP), which has investment in several e-commerce related ventures, including last-mile delivery company One Click, “e-commerce is growing at a very fast pace but faces challenges.”

Mansour highlights lack of data analytics as a key hindrance to the market. “What’s needed to boost the online commerce market is data, including predictive data, which leads to insights for actions, as well as automated marketing services,” he said. “But of course, there are a lot of (e-commerce) players in the market now, which means there is a lot of growth potential. The market is getting better … but it’s not there yet.”


‘Fuel of the future’ comes of age as Aramco opens first hydrogen filling station

Updated 19 min 32 sec ago
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‘Fuel of the future’ comes of age as Aramco opens first hydrogen filling station

  • Fatih Birol’s comments were a deliberate poke at those experts who think that the sheer logistics of hydrogen make it always an unlikely solution to global energy challenges
  • Birol’s article was followed by a report from the IEA that put some meat on the bones of the argument that hydrogen is key to solving problems such as global warming

DUBAI: Fatih Birol, executive director of the International Energy Agency, cracked a joke in the Financial Times a couple of weeks ago.
“Hydrogen is the fuel of the future, and it always will be,” he wrote about the fuel that many experts agree could hold the key to the world’s energy problems.
It was a deliberate poke at those experts who think that the sheer logistics of hydrogen — generation, storage, and transportation — make it always an unlikely solution to global energy challenges.
Birol’s article was followed by a report from the IEA that put some meat on the bones of the argument that hydrogen is key to solving such problems as global warming and environmental degradation.
“The world has an important opportunity to tap into hydrogen’s vast potential to become a critical part of a more sustainable and secure energy future … The world should not miss this unique chance to make hydrogen an important part of our clean and secure energy future,” the report said.
That argument will get a critical boost today, when Saudi Aramco, the biggest oil company in the world, opens its first hydrogen fueling station in Dhahran Techno Valley, in the heart of the Kingdom’s oil producing region.
Aramco has partnered with Air Products, a US company that has been a pioneer in the use of industrial gases, to produce a filling station for hydrogen-fueled vehicles.

 

It is very much a test. “The collected data during this pilot phase of the project will provide valuable information for the assessment of future applications of this emerging transport technology in the local environment,” Aramco said when the project was first announced.
But it is something Aramco has been investigating for a long time. Ahmed Al-Khowaiter, Aramco’s chef technology officer, said: “The use of hydrogen derived from oil or gas to power fuel cell electric vehicles represents an exciting opportunity to expand the use of oil in clean transport.”
Hydrogen — essentially what is left when you take the oxygen out of water — has been recognized as a potential fuel source for many decades. Motor manufacturers developed a hydrogen motor engine 50 years ago, but the ease and accessibility of hydrocarbon fuels — oil, gas and coal — made it uneconomic to develop this technology beyond the prototype stage.
Now, as the debate over the role of hydrocarbons in the global environmental balance has become ever more intense, some experts, including Birol and other influential parts of the thought-leadership establishment, believe hydrogen is the next Big Thing in global energy trends.
The World Economic Forum (WEF) said recently that “green” hydrogen offers a solution to the world energy challenge, and that is the problem the theoreticians are struggling with: Hydrogen is released naturally in the process of burning hydrocarbons, but it is self-defeating, in an environmental sense. if you have to burn oil, gas or coal to produce it.
On the other hand, renewable sources, like sun, wind and water, do not produce enough hydrogen to be practically or commercially viable, and not at the right times, when people actually need it.
But, as the WEF noted recently “low-cost green hydrogen is coming”, as technology advances mean the cost of renewable energy falls dramatically each year. The Middle East already has a very big and very cost-efficient program for solar energy generation.
The other challenges lay in how to store and transport hydrogen. It can be loaded onto a tanker like LNG, or pushed through pipelines, but it would require a huge investment to change current logistics systems — essentially designed for oil and LNG — to handle hydrogen.
Many countries, including Saudi Arabia, already have the infrastructure associated with oil and gas refining and petrochemicals production to be able to equip “hydrogen hubs,” as long as there is government will and commercial incentive to do so.
For the Kingdom, it looks like a no-brainer for the future. As Birol said: “So, hydrogen offers tantalising promises of cleaner industry and emissions-free power. Turning it into energy produces only water, not greenhouse gases. It’s also the most abundant element in the universe. What’s not to like?”

FACTOID

Technological advances mean low-cost ‘green’ hydrogen offers a solution to the world energy challenge, according to the World Economic Forum.