Despite the fact that the Arabian peninsula is home to an $8.5 billion luxury market, only one-third of the 94 brands included in our 2013 Digital IQ Index: Middle East Prestige report were shown to currently offer e-commerce in the region. And of those, the overwhelming majority (75 percent) are hotel brands. Just three global non-hotel brands—Bottega Veneta, Burberry, and Gucci—facilitate online transactions in this region. Local Middle East brands, of which there were 13 in our study, are surprisingly also behind the e-commerce curve. Only hotel chains Rotana and Meydan, and retailers Splash Fashions and Damas Les Exclusives have sites with functioning e-commerce.

Middle-East-2013-E-Commerce-Penetration

Filling the e-commerce void in these countries are third-party online marketplaces like Souq (similar to Amazon Marketplace) and digital coupon sites like Cobone (similar to Groupon). In March of this year, Souq.com registered 830,000 visitors in the UAE alone, making it the ninth most popular site in the country. Digitally optimized for the region, Souq, unlike most global brands, offers free returns and region-friendly COD, PayPal and cashU payment options. Understanding the importance of mobile, Souq developed an easily navigable app that seamlessly integrates with the desktop shopping experience. Since its launch in July, the Souq Deals & Shopping app has grown to become the fourth most popular iPhone app in the UAE iTunes store.

Nearly all (94 percent) of the many global brands available through Souq are there in a gray market distribution capacity, with an average of 198 product listings per brand. Though the relatively new Souq Fashion subdomain offers some recognizable global brands–including 18 percent of the brands in our Index–most of the higher-end designers are not yet present there. This is likely due to the fact shoppers primarily use Souq as a site to find products at a steep discount.

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