AMZN Amazon.com Inc

By Carlo Martuscelli 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 3, 2019).

Amazon.com Inc., Alibaba Group Holding Ltd. and other online retailers are competing more fiercely to gain a foothold in the Arab world during this year's Ramadan, Islam's holy month of fasting and gift giving.

Ramadan has long been a time when Middle Eastern retailers offered steep discounts on everything from cars to toasters, but the competition was mostly confined to traditional Arab markets and the Persian Gulf's glitzy malls. Online retail lagged behind, but that has begun to change this Ramadan, which started May 5 and is scheduled to end Tuesday.

Online sales in the Middle East and Africa have doubled so far during Ramadan this year when compared with a similar time frame two months before the holiday, said Michele Iozzo, managing director of Middle East and Africa at Criteo, an online advertising platform that tracks data. In 2018, sales went up during Ramadan by 98% compared with the baseline in the preceding period, while in 2017 this figure was 70%, he said.

"We've seen significant increase in Ramadan sales, especially in Saudi Arabia, Oman and Morocco," said Matt Zhang, head of Middle East operations at AliExpress, the retail arm of Alibaba Group.

The sales increase occurred after Amazon, Alibaba and others made investments in the region and began big marketing campaigns around Ramadan.

Amazon entered the region in March 2017 with the acquisition of local player Souq.com for $580 million. Just before Ramadan began this year, Amazon launched its first branded Arabic-language site in the United Arab Emirates.

Beginning in May, the U.A.E. site prominently featured a section dedicated to Ramadan, illustrated with a crescent moon and lamp -- traditional symbols associated with the religious holidays. In recent days, Amazon's U.A.E. site has switched to a theme around Eid al-Fitr, the holiday of feasts and giving at the end of Ramadan.

Last August, AliExpress upgraded its service to Saudi Arabia and the United Arab Emirates to ensure better and more rapid deliveries.

A number of local online retailers also have emerged, creating a new battleground for market share. Among them are Noon.com, which is backed by Saudi Arabia's sovereign-wealth fund and launched by Emirati billionaire Mohamed Alabbar .

Amazon and other retailers compete to offer the biggest discounts on items ranging from popular Ramadan foods like candied-date confections served at the end of the day's fast, to clothing and electronics. AliExpress has offered discounts for specially-themes items like book holders to place the Quran or special Ramadan lights, to the more prosaic, such as offers for portable chargers for cellphones.

The Ramadan sales demonstrate how big online retailers are trying to move into the Middle East, where many people are under age 30 and tech savvy yet still do most of their shopping in bricks-and-mortar retail.

Online retail sales in the Middle East surpassed $80 billion for the first time in 2018, growing 22% from 2017, according to an estimate from the Ecommerce Foundation, a Netherlands-based industry body. While small compared with Europe, where online sales were $535 billion last year, the Mideast market is growing faster than any other market, and has plenty of scope to keep expanding, analysts said.

"There is a huge amount of demand -- and there is a gap to fill," said Anne-Laure Malauzat, principal at consulting firm Bain & Co.

Lulu Joukhdar, a 25-year-old Saudi, said she recently shopped for the first time on several online retail sites, including Dubai's Namshi, to buy thobes, a traditional, often colorful dress that women wear during Ramadan celebrations. She used to buy such clothes at markets but wanted to avoid the Ramadan traffic in her home city of Jeddah, Saudi Arabia.

"I found better deals and styles online," she said.

One reason that e-commerce has been slow to take off in the Middle East in the past has been the paucity of offerings. There were also questions about service and shipping charges, as few online retailers have warehouses in the region and the local mail carriers have spotty reputations.

"Delivery is still a struggle. You order your product, and it takes forever to get to you," said Ms. Malauzat, adding that often it is simply more practical to go to a physical store.

Both Amazon and Noon have developed their own local logistical arms.

Retailers need Middle East consumers to buy online more often for the region to become an important driver of business growth. For instance, according to Bain, Saudi consumers spend the same amount in one purchase online as their British counterparts, but British consumers purchase online items 18 times a year on average compared with two to three times annually for average Saudis.

Online retailers are working to build trust and brand recognition now in the Middle East, said Ulugbek Yuldashev, chief executive and founder of regional discount retailer AWOK.com.

"There are still many customers to win over," Mr. Yuldashev said.

--Donna Abdulaziz contributed to this article.

Corrections & Amplifications The chart in an earlier version of this article incorrectly listed annual sales in the region in millions instead of billions. (June 2, 2019)

(END) Dow Jones Newswires

June 03, 2019 02:47 ET (06:47 GMT)

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