Souq.com, one of the region’s biggest e-commerce platforms, expects sales to grow by up to 90 per cent this year as it adds more retailers and consumers increasingly use smartphones to make purchases, the company’s chief executive said.
Online sales are set to grow between 60 and 90 per cent, depending on the country of sales, because customers are looking for value amid the economic slowdown gripping the region.
“I look at the economic slowdown as an opportunity,” said the chief executive Ronaldo Mouchawar. “We met many retailers who may want to look at our channel as a new way to generate sales, so they will put more products on Souq. We see many customers are more value-driven.” The Middle East’s e-commerce market is forecast to reach $20 billion this year, according to Souq.com.
High mobile penetration exceeding 100 per cent in some countries and a young population familiar with technology are helping to boost growth in online shopping.
Souq.com expects profit to grow as it adds new categories to its marketplace, which sells mainly electronics, household items, and clothes among other products.
“Because we are diversifying our categories, our margins are improving and we are adding non-electronic categories that are supporting the profit,” said Mr Mouchawar.
Souq.com this week raised Dh1 billion, the biggest regional fundraising for an e-commerce firm, in a bid to grow its operations. The operations currently cover the UAE, Saudi Arabia and Egypt and ships to Bahrain, Oman, Kuwait and Qatar.
The investors included US-based investment firm Tiger Global Management, South Africa’s Naspers, Standard Chartered Private Equity, the World Bank’s financing arm, the International Finance Corporation and the Edinburgh-based asset manager Baillie Gifford.
Tiger and Naspers were part of previous fundraising rounds, with Naspers investing US$75m in March 2014.
Standard Chartered, which invested $50m in Souq.com, said the eretailer was the highest valued internet company in the region.
“The funding we raised for the short term is adequate to fund growth over the next two years,” said Mr Mouchawar, dismissing plans to float the company in the near future. The funding will be used to improve logistics, payment forms, mobile applications, and retain talent among other things, he added.
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