Social Commerce in the Gulf Cooperation Council countries

Hassan Mikail, head of Shipa Ecommerce, has over 20 years combined experience in the digital, marketing & global partnerships. He has spent the last 11 years building scalable technology systems for businesses that are both consumer facing and merchant friendly, with a key focus on cross-border ecommerce. In this guest post today, Hassan reveals what’s happening with ecommerce in the Gulf Cooperation Council countries (GCC) and the broader Middle East and how European retailers are missing out:

Social Commerce: The Future is Now in the GCC

The use of social media to buy and sell is the fastest-growing segment of ecommerce in the Gulf Cooperation Council countries (GCC) and the broader Middle East. Social commerce in the region deserves more attention from merchants and brands that have, until now, devoted most of their focus to larger, more mature markets.

Globally, the market for global social commerce – worth about $475 billion in 2020 – is forecast to reach $3.4 trillion over the next seven years, according to Grand View Research.

As a share of all ecommerce, sales through Instagram, WhatsApp, Snapchat, Facebook, Tik Tok, YouTube, Reddit, Twitter, Pinterest, Taobao, Fab, Poshmark, Etsy and other social platforms are expected to expand from 5% to 12% over that same period.

A number of factors are driving growth in social commerce, sometimes referred to as “conversational commerce.” Social media penetration and time spent on social media by individual users is increasing. The number of social platforms creating built-in ecommerce experiences is growing. Brands are pouring more money into social advertising.

At the same time, the line between commerce and entertainment is blurring as marketers use live-streaming videos to showcase products and introduce rewards and gamification that engage users and get them to spend.

Across the Middle East, 28% of the population is between the ages of 15 and 29. The median age in the region is 22 – well under the global median age of 28. That’s important because social media penetration and use are highest among young adults and teens regardless of region.

Grand View Research says B2C sales account for 53% of global social commerce sales. The leading categories are personal and beauty care products; apparel; accessories; home products; health products; foods and beverages. Asia Pacific is the fastest growing region for social commerce.

But marketers would be shortsighted to overlook the Middle East and, particularly, the Gulf states, where ecommerce sales spiked 52% in a single year from 2019 to 2020, according to venture capital firm Wamda. The under-30 demographic there is large, curious, and eager for new experiences. It is made up of digital natives, many of them affluent, who are starved for entertainment, connection and information – and eager to both consume and create original content.

Online merchants and brands that have grown into ecommerce powerhouses in the United States, Europe and China have struggled in the GCC and wider Middle East. They trip up on local fulfillment, customs red tape, cross-border shipping hassles, postal and delivery peculiarities, local payment preferences, and a high rate of returns.

Even with all that, it’s clear that the pandemic has caused a seismic shift in ecommerce across the region. A Wamda whitepaper cited a “remarkable spike in demand and adoption” during the pandemic. “Today, 80% of young Arabs shop online frequently, compared to 71% in 2019. Additionally, 50 percent of those aged 18-24 … are shopping more online” even as pandemic restrictions have eased, it says.

Ecommerce in the region is booming, Forbes says, because of the combination of a highly digitized population and a lockdown-induced surge in consumer demand. Part of that surge has been driven by offline retailers that began listing products on Facebook and WhatsApp, using them to conduct transactions and start their digital journeys.

It’s clear the explosive growth in the region’s ecommerce and social commerce will outlast the pandemic. The region’s young population is drawn to Tik Tok and other platforms that are reinventing creativity and giving them a place to find and share videos of acrobatics, dancing, singing, gags and jokes. Social media users in the Arab world are obsessive about sharing and just as eager to share product posts and recommendations as Tik Tok dance videos.

I expect merchants and brands to take more notice of social commerce in the Middle East. They see the data showing that basket values there are higher there than virtually anywhere in the world. And they are familiarizing themselves with the region’s social media influencers, coming to understand what kinds of personalities can help sell in the Arab world.

Meantime, all of the social media platforms are on the cusp of introducing new features that will finally allow them to fully monetize the followings they’ve developed, especially in the Middle East.

What’s coming in the Gulf Cooperation Council countries?

• Integration of the buying experience

  Social platforms making changes that will soon have buyers making purchases and payments on their sites – with available payment gateways and logistics options — rather than doing so through sellers’ sites that are embedded on social platforms’ frames. Look for more Checkout features on social platforms such as the one introduced by Instagram.

• Trust-based transactions and payments

  Online sellers in the GCC and Middle East have been bedeviled by consumers’ preference for cash-on-delivery and the related problems of over-ordering and high returns. The pandemic accelerated development of a more trust-based online economy through adoption of contactless payments – digital wallets, credit cards, etc.

• Social seller access

  Social commerce activity will skyrocket once individual merchants – social sellers, solopreneurs and others — can sell through social platforms the way they now do via marketplaces such as eBay, Etsy and Craigslist.

• Augmented reality

  Social media platforms are ideal vehicles for use of next-generation interactive experiences that will let shoppers try on clothes, go for a test drive, or try new products virtually.

• Big Data and better targeting

  Social platforms allow brands to collect lots of data on consumers – age, sex, interests, languages, tastes, buying preferences, travel habits, admired public figures — and target them better. They can tailor content and promotions to individual tastes.

• Innovation from China

  The country making the most advances in digital shopping tools – and in entertainment that gets eyeballs – might surprise you. It’s not the United States, it’s not a country in Europe. It’s China.

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