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GCC e-commerce sector to register $50bln by 2025: Kearney Middle East

Sector would witness a compound annual growth rate at 20% between 2020 and 2022 and 14% until 2025

The e-commerce sector in the GCC region is expected to record $50 billion by 2025, according to a new report by Kearney Middle East, a management consulting firm.

The e-commerce sector will enable the retail sector to grow over the next five years, Kearney referred in its report ‘GCC E-commerce Unleashed: a Path to Retail Revival or a Fleeting Mirage?’, according to a press release on Tuesday.

The report predicts that the sector would witness a compound annual growth rate (CAGR) at 20% between 2020 and 2022 and 14% until 2025.

Without the coronavirus (COVID-19) pandemic, the same growth was projected at 14 and 10%, respectively,reflecting the impact of the pandemic and the lockdown on boosting the sector’s growth in the region.

Nevertheless, the increase in e-commerce marketplaces and a decline in physical store sales would pose some challenges and risks to commercial real estate and small- and medium-sized enterprises (SMEs) that have not adopted online sales channels yet.

In the UAE, 36% of SMEs have launched their digital investments, while only 4% are planning to have online channels in the future, as shown by an earlier survey by Kearney.

The Partner at Kearney Middle East, Adel Belcaid, said: “In our last e-commerce outlook for the GCC in 2017, we forecasted growth of 35 percent CAGR, which was essentially more than a four-fold jump in value for the sector between 2015 and 2020. By the end of 2019, it was worth just short of $18 billion, with signs of maturing growth and intense market competition.”

The Partner at Kearney Middle East, Debashish Mukherjee, commented: “The projected growth in GCC e-commerce rests on crucial factors like the logistics infrastructure, flexible manpower models and centrally governed policies.”

Source :zawya

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