Is e-commerce witnessing a boom in Egypt?


Egypt has the largest consumer market in the Middle East, which also makes it the largest retail market in the region. With an internet penetration rate exceeding half the population, this is often expected to result in a significantly big e-commerce industry – however in recent years, that hasn’t been the case.

In a 2020 study by Cairo University researchers Mayada Aref and Ahmed Okasha, it was concluded that credit card penetration is one, however not the biggest, of the barriers of expansion of e-commerce in Egypt. Security concerns was named as the biggest obstacle to the market fully realizing its potential.  That was all before millions of Egyptians were subjected to extended lockdown as a result of Covid-19, which brought about changes in their consumer behavior that could prove to be incredibly beneficial to e-commerce activities in Egypt on the long run.

“There has been a major shift in Egyptian consumer habits following the outbreak, with the volume of online shopping expected to increase by at least 50% in the coming period,” says Souq.com Egypt General Manager Omar ElSahy to Business Forward.

“During the first few weeks of the crisis, one of the most prominent changes we observed was a strong increase in demand for everyday products such as groceries, hygiene products, and work from home supplies as people were staying home. We have also seen an increase in purchases from lifestyle categories including kitchen, entertainment, and sports equipment, reflecting the change in consumer behavior.”

Digital-native local brands

Alongside global retailers like Amazon (Souq.com) and Jumia, a number of digital-native lifestyle and retail brands have emerged in Egypt over the past few years. For the lack of similar resources as big global names, these local brands face their own unique logistical challenges to fully exploit their e-commerce potential.

“It’s one thing to have a physical store, and an e-commerce platform setup to go alongside it. But when you solely exist online, especially as a furniture store in Egypt; a market that hasn’t fully adopted online shopping into its culture yet, then you’re going to face a heap of challenges,”  Alaa Khalil, founder of Egyptian e-furniture store Drowzy, had said in an earlier interview with local publication Startup Scene.

In his quest to establish his startup as a real competitor, Khalil identified prolonged delivery time for furniture in Egypt as a main challenge, as he explained it could often take up to three months.

“The time’s compounded more and more if you’re buying from a marketplace that’s dealing with several manufacturers and brands. So we sought to offer not only quality products, befitting a modern and practical lifestyle, but also to ensure 8-10 day delivery for all of our orders,” he further elaborates.

Payment method barrier

And while the lack of bank accounts has acted as a main barrier to the industry in the past, most online retailers in Egypt have adopted to that by offering cash-on-delivery (COD) options for their products. That eliminated security concerns for most users,  with big retailers like Souq.com taking that convenience a step further.

“While we continue to offer COD as a payment option for Souq.com customers, we are increasingly encouraging customers to use online payment methods for contactless deliveries using debit and credit cards (Visa and Mastercard) or gift cards,” explains ElSahy.

“Partnering with a number of local banks, we also offer cashback options as well as installment payment plans to Souq.com customers making payments more affordable. Trust and convenience are key when it comes to payment methods, and we will continue innovating on behalf of our customers in this space.”

While small and medium sized startups often lack big enough operations to establish such agreements with local banks, it has never been easier to place their products on platforms like Souq.com for better visibility and a variety of payment options.

“In 2019, nearly 225,000 small and medium-sized businesses surpassed $100,000 in sales in Amazon’s stores worldwide,” says ElSahy. “All aspiring entrepreneurs, regardless of their experience or business know-how, have access to the Amazon resources, products and tools that they need to help grow a business.”

Post Covid-19

In addition to bank card penetration, internet penetration and transactions’ security, another barrier to e-commerce outlined in the aforementioned study is whether online shopping is the social norm or not in a given market. In Egypt, it’s not, and while that has held back the industry in the past, Covid-19 may have brought about a much-needed change.

“A recent study by Visa ‘stay secure’ survey found that 85% of current online shoppers surveyed believe they will continue to shop online more post the pandemic, with 82% saying they will continue to opt more for paying online with card or digital wallet over COD,” explains El Sahy.

The same study called for regulating e-commerce activities, which Egypt has taken big strides towards after its parliament passed a long-awaited Personal Data Law, which, in addition to having clear definition of personal data and imposing hefty fines on those who exploit it, it also takes a significant leap in regulating e-commerce platforms, protecting consumers from fake platforms pushing real ones to register their activities. Check out this video to know more:

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