Evolution of MENA e-commerce retailing

June 20, 2022 | By RetailME Bureau

E-commerce photo

Word by Stefanie Cunningham,  General Manager- E-Commerce at Omnicom Media Group.

By 2025, 16% of retail sales will occur online in MENA, up from 1.9% in 2017, making our region one of the fastest-growing globally. This rise is largely driven by evolving shopper habits, accelerated by the pandemic. Another contributor is online retailers’ future-proofing of their offering, including developing their advertising and data tech solutions. Subsequently, CPG brands are now rapidly investing in eCommerce retail media, ensuring digital commerce is at the forefront of their marketing and commercial strategies to capitalize on this high growth channel.

Some of the most common barriers CPG brands face when aiming to scale their online performance via ecommerce retailers in MENA today are:

  • A highly fragmented online retailer landscape, with a proliferation of players to manage performance, prioritize efforts and allocate investments. Competition is high between local and international retailers as 50% of online orders in MENA come from global cross-border shipments. CPG brands have a complex range of retailer stakeholders to manage, which is continuously evolving as retailers exit or consolidate in the market
  • Online retailers lack self-service access to structured commercial sales data and market-share insights from third-party providers. This impacts brand’s ability to forecast potential growth and manage performance effectively through data
  • Retail Media advertising is at a very nascent stage in the region, as most retailers lack biddable and self-service advertising solutions. This prevents brands from optimizing their performance in real-time, specifically in paid search and on-site banner advertising

Some local e-tailers are leading the way though delivering winning consumer first experiences and/or developing advanced advertising and data solutions for brands to drive their own growth:

  • Horizontal Marketplaces: Amazon, Noon, Jumia
  • Food Delivery: Talabat, Deliveroo, Hungerstation
  • Aggregators & Dark Stores (QuickCommerce): Tmart, Instashop, Quickmarket, Careem, Nana, Drops
  • Omnichannel Grocery: Carrefour
  • Pureplayers: Ounass, Namshi, Mumzworld

These online retailers are leading the way in the MENA region, with five key best practices driving their growth:

  1. The Endless Ecommerce Shelf: Activation of dark stores/warehouses/restaurants that only service online orders enable retailers to expand and customize their online selection to their audience. This provides shoppers with access to a greater selection than the limited space of physical stores alone, merchandising in real-time to rich consumer shopper insights.
  2. Quick-Commerce: Tapping into the rising trend of instant gratification, top-up shopping and impulse buying needs of consumers is made possible by the service economy in MENA. Quick-commerce retailers are delivering orders in as little as 15 minutes through micro-fulfilment strategically based near areas of high order demands. Instant deliveries also help to combat the threat of overseas retailers: why wait two weeks for your ASOS delivery, when you can get your fashion needs met by Ounass in two hours?
  3. Advanced Advertising Tech: Retailers are fast turning into the media platforms of the future, leveraging their shopper behavioral data to build highly targeted campaigns based on purchase intent. Retailers who invest in their ad-tech capabilities will access a higher share of CPG advertising budgets and attract clients in new verticals like Automotive, Telco, or Banking, all of whom are eager to engage with highly targeted shopper audiences. Retailers that stick to blanket banner campaigns that cannot be optimized in real-time will be left behind. In the USA today, Amazon is now the third largest Digital Media player with over $25bn ad revenue in 2021, making retail media the #3 biggest digital marketing channel. This trend will soon be replicated in MENA so it’s essential retailers adapt to take their fair share of this.
  4. Data Monetization: Retailers have endless data they can monetize as a diversified revenue stream to offset increasingly tight profit margins. At the same time, CPG brands are desperate to know more about their own performance and access rich shopper behavioral insights to optimize their commercial and media strategies. The absolute basics expected of online retailers is to provide self-service access to operational and commercial EPOS performance. Beyond this, advanced retailers are rapidly tapping into Data Cleanroom solutions with brands, leveraging this secure and GDPR compliant environment to match and analyze data sets. Clean Rooms can provide insights such as conversion signals and shopper behavior to better inform media targeting, personalization and attribution.
  5. Consumer-First Strategy: Ultimately, success for retailers comes from their ability to acquire and convert shoppers, increase order frequency and maximize basket size, in a sustainable and profitable manner. The key is to develop and implement winning online value propositions and loyalty strategies at scale. Mistakes will happen along the way, such as out of stocks, checkout issues and delayed deliveries, but retailers that invest in seamless customer services that provide positive resolutions that put shoppers first will retain loyalty from consumers and unlock investment from CPG brands accordingly.

In 2022, CPG brands will become more and more focused with their marketing investments and expectations of ROAS (Return on Ad Spend). Retailers that invest in both their success with shoppers alongside development of their advertising & data tech advancements for CPG brands will win in the long run. Globally, retail media is one of the fastest growing digital marketing channels, providing both CPG brands and retailers endless opportunities to unlock growth. In MENA, the playing field is still open for retailers to lead the way.

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