Amazon is actively expanding its e-commerce business in the Middle East, by introducing home services in the UAE (UAE) in July 2020, and introducing payment services in the wider Middle East and North Africa (MENA) region to increase product launches in December 2020 It was launched in January and Amazon Prime was launched in Saudi Arabia in January 2021.
The American technology giant has been focusing on entering emerging markets to promote its growth, focusing on the rapid adoption of mobile Internet in these markets, the lack of traditional infrastructure, and the increasing number of people entering the middle class.
In the Middle East and North Africa, Amazon acquired Dubai’s e-commerce platform Souq.com in 2017, marking its entry into the region and triggering a large-scale expansion into the Middle East.
Since acquiring the largest e-commerce platform in the Arab world, Amazon has been working hard to build its regional products and increase its visibility. This strategy has led to many rebranding.
Souq.com UAE station officially changed its name to Amazon.ae in May 2019, and Souq.com Saudi Arabia station officially changed its name to Amazon.sa in June 2020. Similarly, Souq.com's payment platform Payfort was renamed Amazon Payment Services and debuted in the Amazon ecosystem two months ago. Services provided include other installment plans, fraud prevention and payment performance analysis.
Another subsidiary of Helpbit and Souq.com, the repair and service market, has also been renamed Amazon Home Services. The service was launched in the UAE in July 2020. It allows customers to purchase and arrange various professional services through Amazon.ae, including house cleaning, electronic product repair, car wash, pet grooming, and smart home services. Service providers who sell through the Amazon program must follow the predefined ranges and prices set by the platform and pay a 16% revenue share for the work done.
Amazon Home Services is currently only available in the UAE, and it is unclear whether the company plans to bring it to other markets in the Middle East. Other subsidiaries of Souq.com include QExpress and Wing.
In the Middle East, the e-commerce market is booming, and sales in 2020 are estimated to increase from US$4.3 billion in 2016 to US$69.2 billion.
In some markets, transformation is developing rapidly. A study found that 92% of consumers in the UAE and Saudi Arabia had changed their shopping habits by 2020, while another survey of six countries including Jordan, Lebanon and Egypt showed that one-third to Half of people will shop online frequently since the pandemic.
In the UAE, Amazon is the top e-commerce platform, with 46% of shoppers using the service. According to "Arab News", Noon ranked second with a gap of 16.9%.
In the Middle East, the way people trade is also changing. A survey by Standard Chartered Bank found that the use of digital payments has been on the rise since the outbreak, and nearly half of consumers in the region now prefer to use mobile online payments instead of in-person cards or cash. In the UAE, nearly two-thirds (64%) of respondents expect the country to become cashless, and more than half of the respondents expect the country to achieve this goal in 2030.
In terms of financial services, Amazon’s strategy is mainly focused on increasing participation in the ecosystem through three key pillars: payments, cash deposits and loans.
This strategy has translated into the launch of solutions, including digital wallet Amazon Pay, Amazon Cash program that allows cash on delivery payment, Amazon Lending for small businesses and Amazon Prime cards for consumer loans.
So far, most of Amazon's efforts in the field of financial technology have focused on the Indian market. The tech giant launched its Amazon Pay digital wallet in 2016, and has since launched credit cards, signed up to a state-backed payment network, and now processes payments for movies and air tickets, as well as phone calls and utilities.
Recently, it has added insurance and gold investment products to India’s financial services menu.