A recent survey conducted by Google covering 1500 privately owned companies in Saudi Arabia, the U.A.E and Egypt, with employees fewer than 250, revealed that the majority of SMEs in these countries have no planned or active online presence.

The survey revealed some astonishing finds showing that only 18% of SMEs in the UAE, 15% in Saudi Arabia and a mere 7% in Egypt had any kind of online presence at all, whether in the form of websites, online forums or any kind of online channels of communication, advertising or online customer support.

This number is drastically smaller compared with other countries across the world such as the US with an overall business online presence of 40%, France, 60% and Turkey, 37%.

With the ongoing boom and increasing reliance on social media usage and smart technology, the internet has become an essential way of reaching out to local and international audiences through various forms of online advertising.  It’s also a medium through which consumers are able to gather product data, compare parallel products, make price comparisons and determine current market trends.  In short, consumers are able to make more informed choices regarding purchases leading to customer satisfaction and full control over their purchasing decisions.

Apart from promoting products and services, the internet is the best means for providing customer support, saving resources and reducing costs for businesses, along with a faster response time for consumers as compared to by phone and mail queries.

In the first ever survey conducted by VSA on E-commerce in the MENA region (Middle East & North Africa), 90% of UAE and Saudi businesses not online were unsure how the internet could be useful or a profit building tool for them due to lack of relevant market data and statistics with relevance to online marketing as a successful marketing medium.

The following graph shows the internet usage ratio of the population in the countries of the MENA region.

Internet World Stats

According to Internetworldstats, Internet usage between 2000 and 2011 witnessed impressive growth. The total number of internet users at the end of 2009 was estimated at 1,850 million (27.2% of total world population). In August 2010, the 2 billion mark was passed (29.2% of total world population) while in 2011, 33% of the world’s population went online at 2,267 billion users out of 7 billion – a growth of 530% compared to 2000. According to analytical predictions, this number will grow and reach to between 3.2 and 3.5 billion users by the end of 2015. In­­­­­ that same year the number of mobile internet users will surpass the number of users accessing internet from home or work.

In the MENA region, growth of internet usage was also impressive from under 3 million users in 2000, to close to 129 million, or 23% of the total population. For the GCC countries the increase was from 5.3 million users to 113 million, or an increase of over 2000%.

By region, currently 45% of the world’s internet users are based in Asia, 22% in Europe, 12% in North America, 10% in Latin America, 6% in Africa, 3% in the Middle East and 1% in Australia/Oceania. The number of internet users in the Middle East is close to 2,250% since 2000, compared to 528% for the world.

According to IMRG estimates, total B2C e-commerce sales in 2011 in the MENA region are estimated to have grown to between US$9 and US$10 billion, of which US$5.4 billion was generated from the Middle East.

The potential for E-commerce success in the Mideast can be seen from the following analytics:

Smart phone usage at 74% is the highest in the world in the U.A.E, while Saudi Arabia having the biggest audience for YouTube videos in the world; a 100 million YouTube videos are watched every day in the MENA region and a 100 million Google searches are conducted across the MENA region on a daily basis.  Additional research shows that 88% of the Middle East’s online population uses social networking sites on a daily basis.

According to eMarketer, online buyers in the MEA (Middle East and Africa) region will spend US$20.6 billion this year on travel expenses, digital downloads and event tickets, currently making MEA the smallest e-commerce market in the world.  There are several reasons hindering the growth of e-commerce in this region of the world.

E-commerce in the Middle East is facing challenges faced by most countries in their early stages of e-commerce development.

In transforming from a cash centered society to electronic and digital online payment systems, there are several issues with regards to trust.  These include online payment security concerns, privacy concerns and issues regarding the viability of digital payment methods.

Mail delivery is another factor hampering the growth of e-commerce.  With most Middle Eastern countries on the P.O. Box system, couriers require proper street addresses to deliver packages and goods.  Without a proper street address mailing infrastructure, mail delivery can be faulty, time consuming and expensive, preventing consumers from placing orders and adding risk and headache for them.­

Arabic is fast becoming the major mode of communication on social media websites in the GCC states. Providing online services in Arabic, therefore, is important in reaching out to the Arabic-speaking customer base on the web and plays a crucial role in engaging the Arabic clientele in online services. According to statistics compiled through the Visa survey, the number of Arabic-speaking Facebook users has rapidly accelerated by 45%.  The total number of Arabic-speaking Facebook users in the GCC countries now accounts for 23% of Facebook’s total GCC users.

Relatively costly internet access and service is an additional factor preventing internet availability from reaching everyone in the region.  Public Wi-Fi, although catching on fast in malls and cafes, is not widely and easily accessible at most places or to most people.  Low cost internet and increased public Wi-Fi services will increase internet access for the average consumer in the region.

A strong government initiative, to launch, support and establish e-learning and e-commerce projects in all GCC states will undoubtedly enhance internet usage and e-commerce developments, develop business interests in this domain and eventually pave the way for increased consumer usage and trust in the e-business world.

Despite the hurdles currently hindering the development and success of e-commerce in the Middle East, the region shows much promise with a young population at a median age below 25 that are more adept and open to embrace new internet trends and smart technologies.  High GDPs and rising populations and tourism numbers are heavily attracting international retailers to this prosperous little region of the world.  With internet usage and social media on the rise, Internet commerce is surely soon to dominate the market.