Saudi consumers give online retailer AliExpress boost in Middle East market

Saudi consumers give online retailer AliExpress boost in Middle East market
Chinese e-commerce AliExpress has started offering several new services due to the increasing amount of purchases from the region. (AliExpress)
Updated 14 November 2019

Saudi consumers give online retailer AliExpress boost in Middle East market

Saudi consumers give online retailer AliExpress boost in Middle East market
  • AliExpress currently delivers to more than 200 countries and can be used in 18 languages
  • Around 60 percent of the consumers are below the age of 35, with 51 percent being female

DUBAI: Due to the increasing amount of purchases from the region, the Chinese e-commerce AliExpress has started offering several new services.
The growing demand came specifically from Saudi Arabia and the UAE, where the retailer started offering consolidation of orders for cheaper delivery and cash on delivery as a payment option.
These services were tailored to consumers from the region, as the company knew “cash on delivery is very popular in Saudi and UAE,” according to AliExpress’s Middle East head, Matt Zhang.
The retailer, which is under the Chinese Alibaba multinational conglomerate, is also trying to expand its provided local services.
“We have an overseas warehouse in Dubai. We are trying to open a warehouse in Saudi. We are in the process of all the legal and facility planning,” Zhang said.
Sellers will have the chance to use this facility, which is usually stocked with high-demand items, to decrease delivery times.
They also use the local delivery company Aramex in Saudi Arabia and the UAE to decrease the amount of time required for orders to reach consumers.
“Cainiao works with local partners” to enhance the buying experience, Zhang added. Cainiao is a technological company and the logistics arm of Alibaba group, providing the various businesses under the conglomerate with a variety of solutions locally and globally.
All of these additions follow AliExpress’s main strategy to expand in the region, which is to provide “a good selection, more competitive price and good service,” Zhang said.
The e-commerce company has been working with a marketing agency for the region as well, as they believe they need “more local insights,” he added.
For consumers in Saudi Arabia, their top three categories for shopping are consumer electronics, home and garden, and phones and accessories.
One of the reasons why consumers choose to buy such items from AliExpress is the value for money they get in exchange.
Buyers and sellers are now able to skip the tedious process of export and import through warehouses and distribution centers, which shortens the whole value chain and provides the same goods for a smaller amount of money.
Another interesting defining factor of consumer behavior in Saudi Arabia is the tendency to explore more options under each category compared to other countries.
The top three categories make up less than 40 percent of the ordered products, leaving the remaining more than 60 percent scattered over a long list of sub-categories.
On top of AliExpress, Alibaba is penetrating the regional market in other ways too.
If you have noticed the recent 11.11 sales and offers, they have been inspired by a decade-long shopping festival in China.
Although 11.11 is just starting to bloom in the region, it is a long-established event in China featuring a variety of entertainment and shopping events.
The famous US singer, Taylor Swift, performed at Shanghai’s Mercedes-Benz Arena during this year’s gala event for the shopping festival.
Several local retailers offered discounted items, ranging from baby care products, to groceries, to electronics and clothes.
At the end of the 24-hour shopping festival, Alibaba’s gross merchandise value (GMV) surpassed $38 billion, according to the company.
Alibaba reported that over 215 leading international brands, like Lancome and Shiseido, debuted one million new products, with over 240 11.11 themed items, during the 2019 festival.
The conglomerate is currently focusing on new retail in China, or as they have explained, an offline and online shopping experience. Tmall customers can view products online, and either buy them through delivery of find the nearest outlet to check the items in real life.
They are also undertaking new ventures in the country, such as the Flyzoo hotel in Hangzhou, which is fully automated and is operated by robots.
AliExpress currently delivers to more than 200 countries and can be used in 18 languages. Around 60 percent of the consumers are below the age of 35, with 51 percent being female.
Currently, the countries with the highest GMV are Russia, Spain, France, Poland and Brazil.
The retailer is also working on offering more international businesses to operate on their website and sell products. The service has already been launched in Russia and Turkey.


Why North American investors are gobbling up booming bitcoin

Updated 10 min 46 sec ago

Why North American investors are gobbling up booming bitcoin

Why North American investors are gobbling up booming bitcoin
  • Digital currency soars to record high amid dramatic $3.4bn global market shift

LONDON: Bitcoin has grabbed headlines this week with its dizzying ascent to an all-time high. Yet, under the radar, a trend has been playing out that could change the face of the cryptocurrency market: A massive flow of coin to North America from East Asia.

Bitcoin, the biggest and original cryptocurrency, soared to a record $19,918 on Tuesday, buoyed by demand from investors who variously view the virtual currency as a “risk-on” asset, a hedge against inflation and a payment method gaining mainstream acceptance.

But the boom represents a shift in the market, which has typically been dominated by investors in East Asian nations like China, Japan and South Korea since the digital currency was invented by the mysterious Satoshi Nakamoto over a decade ago.

It is North American investors who have been the bigger winners in the 165 percent rally this year.

Weekly net inflows of bitcoin — a proxy for new buyers — to platforms serving mostly North American users have jumped over 7,000 times this year to over 216,000 bitcoin worth $3.4 billion in mid-November, data compiled for Reuters shows.

East Asian exchanges have lost out.

HIGHLIGHTS

  • North American exchanges win out in bitcoin boom.
  • Huge bitcoin flows to that region from East Asia.
  • Market players cite demand from large US investors.
  • Fewer retail punters in Asia another factor at play.

Those serving investors in the region bled 240,000 bitcoin worth $3.8 billion last month, versus an inflow of 1,460 in January, according to the data from US blockchain researcher Chainalysis.

The change is being driven by an increasing appetite for bitcoin among bigger US investors, according to Reuters interviews with cryptocurrency platforms and investors from the US and Europe to South Korea, Hong Kong and Japan.

“The sudden influx of institutional interest from the North American region is driving a shift in bitcoin trading, which is rebalancing asset allocations across different exchanges and platforms,” said Ciara Sun of Seychelles-based Huobi Global Markets, whose parent company has roots in China and operates in several Asian markets.

East Asia, North America and Western Europe are the biggest bitcoin hubs, with the first two alone accounting for about half of all transfers, according to Chainalysis, which gathers data by region with tools such as tagging cryptocurrency wallets.

Industry experts caution it is too early to call a fundamental shift in the market, particularly in an unprecedented year of pandemic-induced financial turmoil.

Growing flows to North America this year are not necessarily “an indication that the center of gravity is tilting toward the US,” said James Quinn of Q9 Capital, a Hong Kong cryptocurrency private wealth manager.

Others also point out that cryptocurrency trading is highly opaque compared with traditional assets and patchily regulated, making comprehensive data on the emerging sector rare.

Nonetheless, Chainalysis found North American trading volumes at major exchanges — those with the most blockchain activity — had eclipsed East Asia’s this year. This is not unheard of, with North America having moved ahead on occasions in the past, but never by such a large margin.

Volumes at four major North American platforms have doubled this year to reach 1.6 million bitcoin per week at the end of November, while trading at 14 major East Asian exchanges have risen 16 percent to 1.4 million, according to the data.

By comparison, a year before, East Asia led the way with 1.3 million a week versus North America’s 766,000.

Those interviewed said compliance-wary US investors, many of whom had been deterred by the opaque nature of the market in the past, are being attracted by the tightening oversight of the American crypto industry.

US exchanges are in general more tightly regulated than many of those in East Asia, and there have been several moves by American regulators and law-enforcement agencies this year to clarify how bitcoin is overseen.

A leading banking regulator said in July, for instance, that national banks could provide custody services for cryptocurrencies. The justice department also outlined an enforcement framework for digital coins in October.

“You’re increasingly starting to see distinctions in the market between those that have no regulatory or little regulatory clarity, versus those that do,” said Curtis Ting of major US exchange Kraken.

“Larger institutions seek the predictability that a regulated venue offers.”

Assets under management at New York-based Grayscale, the world’s largest digital currency manager, have soared to a record $10.4 billion, up more than 75 percent from September. Its bitcoin fund is up 85 percent.

“A lot of US funds are trading with large US counterparties,” said Christopher Matta of 3iQ, a Canadian digital asset manager with clients in the US, citing exchanges such as California’s Coinbase that are overseen by New York financial regulators.

“It tells you right there how important the regulatory nature of the space is, and having venues to trade on that are regulated — it’s definitely something that institutional investors are thinking about.”

Another factor behind the 2020 trend is a decline in the armies of retail investors in Asia who drove bitcoin’s 2017 boom, which pushed it to its previous peak.

In South Korea, strict regulations have been discouraging such investors, according to In Hoh of Korea University’s Blockchain Research Institute.

Concerns that major retail exchanges linked to China but based elsewhere could be caught up in a crackdown by Beijing may have pushed down demand, said Leo Weese, co-founder of the Hong Kong Bitcoin Association.

In October, for instance, Malta-headquartered OKEx, which was founded in China, suspended crypto withdrawals for nearly six weeks because an executive was cooperating with an investigation by Chinese law enforcement.