“There is undoubtedly enormous potential for growth in the MENA online retail sector, as well as an immediate opportunity for targeted marketing to effectively reach the significant audience that’s already actively buying online,” said Brendon Ogilvy, VP, digital insights at Effective Measures. “Despite the fact that the overall level of online shopping activity is low, at 32 percent of Internet users, that still represents a market of more than 20 million online shoppers across the Arab world.”

While the survey shows some similarities between the habits of female and male buyers online, female shoppers are more likely to buy clothes and accessories, while men are more likely to buy electronics. In general, men are also more likely to shop online, with those between 30-50 years of age being the most active shoppers. In Saudi Arabia, the top buys online during June, July and August 2010 were airline tickets (24 percent), software (12.4 percent), hotel reservations/tourism services (12.3 percent), clothing/accessories/shoes (12 percent) and electronics (10.2 percent).

Compared to other MENA countries, the Kingdom’s consumers lag in their online purchases of books, music, toys, groceries and event tickets. Some Internet users located in Saudi Arabia have enthusiastically embraced e-commerce, with 5.52 percent of those surveyed making online purchases more than six times per month. At the other extreme, nearly 60 percent of the Kingdom’s Internet users surveyed bought nothing online. For the e-commerce survey, the pool of respondents representing the Kingdom was 52 percent Saudi and 48 percent expatriate.

The reasons for the lag in online shopping adoption in MENA, compared to the US or UK, are varied and include issues related to Internet penetration, broadband infrastructure and cost, payment gateways, local shopping habits, shipping and others. Nevertheless, the GCC states are closer to Western online shopping levels than the rest of MENA, despite the dearth of local e-commerce services.

“One of the great strengths of e-commerce is the global choice that it gives consumers. However, locally focused services are key to market growth and there are very few local shopping services aimed at Saudi Arabia or other countries in the region, and therefore few Arabic language services,” said Carrington Malin, MD, Spot On PR. “There’s a lack of support and funding for local start-ups and a general lack of knowledge by businesses about e-commerce and online marketing. That absence of locally focused services is holding the consumer e-commerce market back, but there are some positive signs.”

Malin pointed out that regional online shopping pioneers Souq.com and Aramex’s ShopandShip.com have helped to introduce the concept of online shopping to the Saudi market and there are now Saudi entrepreneurs experimenting with online storefronts. He added that high credit card penetration is a must for developing online shopping services. Euromonitor’s statistics as of January 2010 found that there were an estimated 22 million debit cards and three million credit cards in circulation in Saudi Arabia in 2009. This is a relatively low number of credit cards, but both adoption and acceptance are growing fast. Paypal, a popular online payment service, has recently opened up its services to Saudi Internet users, providing more options for Saudi consumers to buy online.

“At this point in time, most businesses in the Kingdom are not marketing themselves online and not orientated towards serving customers online. And the clock is ticking. With some eight million Saudi Internet users browsing the web every day, there is no doubt that many businesses that do not harness the Internet will lose out commercially,” Malin advised.

Businesses that would like to take advantage of e-commerce opportunities, must make some strategic moves. First, they must identify the potential online behavior of their customers. They should build an online presence with content and services that are relevant to their customers and make sure that their brands are easy to find online. Marketing a business online is no longer about creating a website that serves as an online brochure. Its more about businesses discovering effective ways to interact with their customers virtually. Online marketing consultants can help companies fast track this process, but it is critical that a business’ management has a general understanding of Internet opportunities and how business is done online, in order to create a successful e-commerce strategy specific to that firm.