Amazon in the Middle East: The Plan for Souq



Amazon expands its international reach

Amazon (AMZN) quietly acquired Middle East e-commerce operator Souq.com, and details of its plans for the business have started to emerge. The acquisition of Souq has helped extend Amazon’s international reach as competition for the control the world’s e-commerce industry heats up.

China’s Alibaba (BABA) and JD.com (JD) have stepped up their international expansion efforts as they pursue more growth. eBay (EBAY) and Walmart (WMT) are also leaving nothing to chance in expanding and strengthening their offshore operations. Amazon had no footprint in the Middle East before its acquisition of Souq.

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A $10 billion revenue opportunity

According to eMarketer, the Middle East e-commerce industry could be worth $10 billion by 2018. This increase is slightly more than double growth in three years, as the region’s e-commerce industry was valued at ~$4.9 billion in 2015. The chart above illustrates the growth of the e-commerce industry in the Middle East.

Amazon’s priority for Souq

To be in a better position to take advantage of this massive revenue opportunity in the Middle East, Amazon is said to have prioritized expansion of Souq’s product offerings. According to Arabian Business, citing Souq co-founder Ronaldo Mouchawar, Amazon is keen to draw more international brands to Souq as part of the efforts to expand product choices for shoppers on the platform.

Souq is betting that the association with Amazon could encourage more international brands to embrace it as an online channel to reach Middle East consumers. Mouchawar suggested that there is strong demand for high-quality consumer imports in the Middle East. This sounds like what Alibaba co-founder Jack Ma has been saying about the strong demand for Western goods in China (MCHI).


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