Arab World Holds Potential for E-Commerce

There are more than 3.1 million Internet users in the Arab world, and much potential exists for early stage e-commerce and online ventures, according to research by the Arab Advisors Group.

According to the research, the potential for Internet ventures in the Arab world is not yet sterling, but enough ground exists for solid business models and ventures to succeed if planned and executed carefully. The findings are based on comprehensive primary research of the eight countries of Saudi Arabia, UAE, Kuwait, Oman, Qatar, Bahrain, Jordan, and Egypt. The assessment of e-commerce business models is based on the “e-commerce pillars,” which include Internet usage penetration levels, infrastructure development, education levels, financial services, such as the availability and usage levels of credit cards and debit cards, and income levels.

According to the Arab Advisors Group, there are currently more than 2.04 million Internet users in the combined Internet market for the eight countries of Egypt, Jordan, Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Kuwait and Oman, expected to grow to more than 3.5 million Internet users by 2002, a cumulative annual growth rate of 31.4 percent. The Arab Advisors Group estimates total Internet users in the whole of the Arab world, including the rest of the Levant countries, and the Arab countries in North Africa at more than 3.1 million users by the end of 2000.

The report concludes that early stage e-commerce and online ventures market potential exists in the Arab world and is growing fast. It stresses, however, that not all models will succeed, and regional ventures are lucky enough to have the dot-com shakeout in North America and Europe as a very useful benchmark for what could work and what will not.

One advantage in the favor of new and established online ventures in the Arab world is that because of their much lower burn rates compared to their rivals in the US and Europe, online ventures in the Arab world might have an opportunity to reach profitability on relatively lower revenues, the report found.

In its report, the Arab Advisors Group, notes the crucial importance of Internet fundamentals: solid margins and economies of scale. It also stresses that established businesses adding an Internet-based channel to their existing sales channels will have the biggest chances for success. As such, a very lucrative market potential strongly exists for payment and back office infrastructure providers, such as Application Service Providers (ASPs).

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