What are the challenges to ecommerce in the Middle East?

What are the challenges to ecommerce in the Middle East?

We’ve spoken about the rapidly increasing growth of ecommerce in the Middle East (Ecommerce trends in the UAE and rest of the Middle East) and shared success stories (Magento ecommerce success stories: Brands from the Middle East).

But we aren’t going to tell you it’s a road paved with roses-every success story has its own share of hurdles. So what are the challenges you may encounter as an ecommerce business in the Arab world?

Low credit card penetration

According to Payfort’s State of Payments 2016 report, credit card penetration in the Arab countries varies widely from 97% in Kuwait, less than 45% in Saudi Arabia and Qatar, to 15% in Lebanon.

To combat this problem, ecommerce leaders in the region such as Souq.com have localized payment options. This includes COD (cash on delivery) and prepaid cards.

However, COD payments have few downsides-slower payments, fear of theft, and the customer changing his mind about the purchase by the time of delivery.

Payment security

Even among the few who do have a credit card in the Middle Eastern countries, there’s a widespread fear of theft of credit card data when using the card to make purchases online. This acts as a deterrent to potential buyers.

Even the preferred secure solutions-3D secure technologies such as Verified by Visa and MasterCard Secure Code-aren’t welcomed by retailers. The Payfort report says these are seen as “an additional step to what for many is already a complicated process,” even resulting in cart abandonment.

Retailers are working around this by implementing secure payment methods and educating buyers about the security measures and how they help.

Security vs. customer convenience – Finding the balance

The State of Payments report stresses on the preference for quick and easy payments in the Arab countries, often at the cost of security. This is led to increase in fraud and identity theft.

Retailers need to find the balance between offering customers the convenience of easy shopping and security. This means ensuring strict protocols within the retail organization, thorough verification of card-holder details and a focus on risk reduction through clearly defined transactions.

Mcommerce – the preferred mode of shopping

Mobile usage in the MENA region is very high (Ecommerce in the Middle East – what are the demographics?), even half of Souq’s sales come from mobile phones. So it makes sense for retailers to be mobile-ready. But it’s a large investment that presents different security threats and calls for cross-platform support.

All the same, retailers need to be prepared to create efficient mobile shopping systems to reap dividends later.

What is Cash on delivery (COD) in ecommerce?

COD is the sale of goods by mail order where payment is made on delivery rather than in advance. If the goods are not paid for, they are returned to the retailer.

Source: Wikipedia

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