The use of social media is reconfiguring the way we shop. Nowhere is this more evident than in the countries that make up the Gulf Cooperation Council (GCC), as well as the broader Middle East. Social commerce in the region is driving a rapidly evolving retail industry. As such, this shift 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 social commerce is forecast to reach USD $3.4 trillion over the next seven years. This figure is largely driven by thriving e-commerce sectors in East Asia, particularly China, Korea and Japan. While the Middle East’s industry is still in its relative infancy, the COVID-19 pandemic is accelerating its success as many shoppers were unable to visit physical retail spaces because of public health measures put in place – and so turned to e-commerce. Taking this into account, it is clear that the region has the resources to make the industry boom in the coming years. In fact, Kearney revised its future e-commerce market outlook in the GCC region to be between USD $21 billion in 2020 to USD $24 billion. By 2025, Kearney estimates that the market in the region will have doubled to USD $50 billion per year.
Social commerce can be defined as the use of social media platforms to promote and sell products and services. This is radically shifting the online shopping experience and transforming the face of e-commerce. Retail outlets are utilising social shopping tools such as live streams to connect with a wide audience while also blurring the lines between commerce and entertainment. Many big brands are also showcasing products and introducing rewards and gamification that engage live users and get them to spend their hard-earned cash. For example, Nike’s NikeFuel fitness programme allows users to track their progress and challenge their family and friends. Rewards include early access to products and events, free shopping on orders, customised workouts and other perks.
Across the Middle East, 28% of the population is between the ages of 14 and 29. The median age in the region is 22 – well under the global median of 28. Clearly, this is indicative of the region’s high social media penetration and use, which is unsurprisingly highest among young adults and teens regardless of regions. Many people who are part of this demographic are looking to more convenient, accessible and cost-effective ways to shop.
Take Saudi Arabia – the Kingdom recently signed a Memorandum of Understanding (MoU) with Amazon Saudi Arabia to create a dynamic business environment that will support SMEs in the Kingdom. This will include development of skills, technology and infrastructure, supporting knowledge and trust in online shopping and e-payments, and working with relevant public sector entities to produce support and incentive programmes to accelerate the growth of investments in digital services and e-commerce.
Meshaal Bin Omairh, Group CEO of Al Othaim Investment Co., is an example of an industry-leader who is committed to reshaping the retail industry in the GCC. Based in Saudi Arabia, Mr Bin Omairh is delivering innovative retail solutions for local people in line with Vision 2030. He says that “as one of the largest operator of malls in the country, Al Othaim Investment Co. is seeking to implement projects that improve the quality of life of young people, and their engagement with brick-and-mortar retail. We are determined to further develop e-commerce offerings for our customers”.
A combination of e-commerce and brick-and-mortar retail will certainly help to ensure the success of the retail industry. Physical retail spaces can leverage the shopping experience for the new age. Gulf Business points out that the future is omnichannel retailing, which allows customers to browse, shop and buy via a range of options. This may include the physical shop and a mobile app, for example, that enhances the customer experience.
For example, the influencer company Vamp worked with the department store Selfridges on an influencer marketing campaign during Eid. The content produced during the project was disseminated via Instagram ads to boost and better tracker conversations. A single influencer post was reportedly responsible for driving 141 customers to their e-commerce platform, which contributed nearly USD $30k in sales. This reflects the opportunity that social commerce has to bridge the gap between inspiration and purchase.
The GCC and the wider Middle East represent an exciting time for social shopping. Thanks to a robust digital infrastructure and a young demographic with some of the highest social media activity in the world, the region is ripe for development of social shopping. The retail industry must embrace the rise of e-commerce by further integrating omnichannel ways of shopping to ensure brick-and-mortar shops are here to stay, as well as providing the best shopping experience for its customers. This will help to ensure it stays ahead of the curve and consolidates its position as one of the region’s most successful industries.
Source: Tech Times