On 28th of March Amazon announced the plan to expand its activity in the Middle East. The e-commerce giant is buying the largest online retail platform in the Arab world, called Souq.com, which was valued around $1 billion.
Souq.com reportedly attracts over 45 million visits per month and although Amazon today did not disclose the price in a short statement announcing the deal, The Bloomberg News Agency is pretty sure of its sources that valued the company at the price – $1 billion (£800 million). However, TechCrunch said the deal was worth a bit less – $650 million (£517 million).
This acquisition represents Amazon’s first move into serving the Middle East region, which is home to over 200 million people. The e-commerce giant said that it expects the acquisition to close by the end of 2017.
Senior vice president of Amazon’s international consumer business, Russ Grandinetti, said in a report: “Amazon and Souq.com share the same DNA – we are both driven by customers, invention, and long-term thinking. Souq.com pioneered e-commerce in the Middle East, creating a great shopping experience.”
“We are looking forward to both learning from and supporting them with Amazon technology and global resources. And together, we will work hard to provide the best possible service for millions of customers in the Middle East,” he added.
Syrian-born entrepreneur and Souq.com’s co-founder, Ronaldo Mouchawar, added: “By becoming part of the Amazon family, we will be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon’s great track record of empowering sellers.”
These statements have finally finished several months of speculations about the fortune of Souq.com. The company had been in long discussions with Amazon about the 30 per cent of its stake that would have valued at $1 billion, before entering into negotiations for an outright sale.
This process took so long because a number of potential acquirers were interested in either its entire business or a sizeable stake, included such e-commerce giants as eBay and Emirati retail group Majid Al Futtaim.
In the last couple of days, Bloomberg also reported that Mohamed Alabbar — whose firm owns The Dubai Mall and the Burj Khalifa; a stake in logistics company Aramex; and is trying to get its own rival site Noon.com off the ground — was also interested in the company.
Amazon “seek to be Earth’s most customer-centric company.” They have pointed out four main principles: “customer obsession rather than competitor focus, passion for invention, commitment to operational excellence and long-term thinking.” In each of our segments, Amazon serve primary customer sets, consisting of consumers, sellers, developers, enterprises, and content creators.
Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered by Amazon.
However, until today, Amazon did not have a presence in the Middle Eastern region which has a population of over 200 million people but currently displays a very low level of online retail spend penetration. According to a report from McKinsey, only around 2 per cent of retail transactions take place online today.
According to CNBC, it is the largest online retail and marketplace platform in the Arab world, featuring more than 8.4 million products across 31 categories such as consumer electronics, fashion, health and beauty, household goods, and baby.
Souq.com claims that they “offer a convenient and safe online shopping experience with secure online payments, option to pay cash on delivery and free returns.”
Since launching in the United Arab Emirates in 2005, Souq.com has sought to branch out into additional regional counties, with pushes into neighboring Bahrain, Kuwait Oman and Egypt, kicking off in recent years.
Today, Souq.com attracts over 45 million visits per month, with localized operations in the KSA, UAE and Egypt.