November 2016 may one day be seen as the watershed month for the UAE’s fledgling e-commerce sector after a flurry of investments, launches and meetings over the past 30 days.
Mohamed Alabbar, the billionaire chairman of Emaar Properties, a man who cut his teeth in retail, has been key to much of this activity with his new mantra of “you’re digital or you die”. On Monday, he announced the launch of a Yoox Net-a-Porter (YNAP) luxury online e-commerce platform for the Middle East – a deal he closed over WhatsApp.
It also emerged that Saudi Arabia’s Public Investment Fund was buying a stake in Adeptio, the investment group led by Mr Alabbar that made a US$2.4 billion deal in June to take control of Kuwait Food Co, also known as Americana. It owns the Middle East franchises for fast food chains KFC and Pizza Hut and also produces branded consumer foods.
This all came just two weeks after Mr Alabbar’s announcement of a $1bn venture — Noon.com — together with the PIF. The scale of this platform aims to challenge Amazon, with about 20 million products, eventually looking internationally but starting our with a scope focusing only on the UAE and Saudi Arabia when its launches in January. Mr Alabbar suggested at the launch of Noon.com that food could be part of the offering, lifting the veil on some of the logic behind the Americana deal.
There will also be some synergy between YNAP and Noon in terms of logistics – Mr Alabbar headed two consortia that bought over 16.45 per cent of Aramex for about $250 million in July this year.
While Mr Alabbar would seem to have positioned himself and his investors well, the battle for the region’s e-commerce crown could be about to get a lot fiercer.
Souq.com, which currently commands 78 per cent of all e-commerce traffic in the Mena region, is in line to get a major new investor.
Souq.com has hired the services of Goldman Sachs to help offload a 30 per cent stake valued about $300m. It was also known that a larger stake was up for sale should the price be right.
Suitors included both online and offline retailers, from regional to international groups.
Amazon.com’s M&A team toured Souq.com’s local warehouse and fulfilment centre last month.
Ronaldo Mouchawar, the chief executive and founder of Souq.com, did not deny that Amazon’s team had toured his Dubai facilities but offered no further comment on what or why they were visiting.
Also this month Mr Alabbar was spotted in The Dubai Mall with Amazon’s founder Jeff Bezos.
The hardening interest from Amazon in the region and perhaps for Souq.com brings the likelihood of an e-commerce slugfest.
However, Mr Mouchawar says there is enough room in the market for everyone – e-commerce accounts for only 1 to 2 per cent of retail sales in Mena against 10 to 17 per cent in more mature markets – for both Noon.com and Souq.com to co- exist.
ascott@thenational.ae
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