S ouq.

com :
The Amazon of the Middle East Gets Acquired by Amazon

W hen Souq.com was launched

in 2005, e-commerce in the
Middle East and North Africa
(MENA) region was in its infancy. With no local
roadmap to follow, its original parent company
Maktoob, a 1998 Internet pioneer that provided
the first free Arabic-supported e-mail service,
chat, greeting cards, and content channels, opted
to follow the successful auction format forged
ten years earlier in the West by eBay. A souq, or
souk, is a traditional Arab marketplace at which
a wide range of products from wood carvings and
rugs to spices and food are exchanged through a © M4OS Photos/Alamy Stock Photo
bargaining process between buyer and seller. In spite of the apropos name, Dubai-based
Souq struggled to thrive, especially after Maktoob was purchased by Yahoo in 2009 and
Souq was left to fend for itself.
A number of problems plagued the early development of e-commerce in the MENA
region. For instance, different currencies, laws, and regulations complicated shipping for
transactions made across different Gulf states, often necessitating bank accounts in each
country and requiring local business partners. Customers were also reluctant to use online
payment systems, preferring cash on delivery (COD) to entering credit card details online.
However, as the years have passed, and the population in the region has grown younger
(in 2021, two-thirds of the population in the region is younger than 35 years of age), MENA
consumers have become more familiar with smartphones and more willing to use online
payment methods. To help overcome barriers presented on the payment front, Souq offered
multiple payment options to its customers, including cash on delivery, Sadad (an Electronic
Bill Presentment and Payment [EBPP] payment system linked with bank accounts), and
credit or debit cards. It also developed its own payment service, Payfort, which helped stan-
dardize payments across many MENA countries.
Although Souq initially pursued a model akin to eBay, forming relationships with small
local businesses and encouraging them to begin selling online, it soon discovered that the
B2C model popularized by Amazon was superior to the auction format in nations where
auctions were not culturally accepted. After switching to a fixed-price model, Souq outper-
formed its peers. As it grew, Souq added fulfillment centers and warehouses, hired delivery
and warehouse personnel trained in modernized logistics systems, and updated its data
storage systems to bolster security. It purchased delivery logistics company Wing.ae to help

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SOURCES: “Amazon’s Growing it deliver goods more efficiently, which can be difficult in MENA countries without a robust
Foothold in the Middle East,”
Fintechnews.ae, February 9, 2021; postal address system, and also established its own delivery network by launching Q-Express
“Retail & Ecommerce Sales by as its logistics arm, thus avoiding the delays caused by third-party courier services.
Country,” eMarketer, Inc., February
2021; “MENA’s PAYFORT Is Now E-commerce in the MENA region is still dominated by men, and Souq has made attract-
Amazon Payment Services and ing female customers a priority. To that end, Souq purchased Sukar.com, a high-fashion flash
Offers Installment Credit,” by
PYMNTS, December 14, 2020; sales site, to bolster its burgeoning fashion division. Sukar benefitted from the use of Souq’s
“PIF’s Noon.com Targets Millions of logistics and delivery systems while Souq gained customer service and fashion expertise
Online Shoppers as Part of Annual
Sales Push,” by Shane McGinley, and reinforced its position as the leading e-commerce site in the region. While women have
Arabnews.com, November 22, lagged behind men as e-commerce consumers in the MENA region, increased Internet
2020; “Middle East and North
Africa Overview,” Worldbank.org, access at home and increased mobile device usage has led to a growth in e-commerce
November 15, 2020; “Noon Founder purchases by women. According to eMarketer, in the MENA region, in 2020, online sales
Alabbar Says Amazon ‘Should Go
Back to Seattle,’” Gulfbusiness. accounted for only 2.5% of all retail sales, compared to over 12% in Western Europe and
com, December 19, 2019; “Amazon over 30% in Asia-Pacific. That low penetration represents a potential huge future market
Rebrands Souq,” by Daphne
Howland, Retaildive.com, May 2, for Souq and other e-commerce companies in the region. eMarketer projects that retail
2019; “Souq Users in the UAE Are e-commerce sales in MENA will almost double, from about $42 billion in 2020 to over $75
Now Automatically Redirected to
a New Amazon Site,” by Sherisse billion by 2024. The Covid-19 pandemic has had a significant impact on both shopping and
Pham, Cnn.com, May 1, 2019; payment habits in the region, with more people shopping online more frequently, and with
“Amazon Launches New Middle East
Marketplace, and Rebrands Souq, the use of digital payments also on the rise. For instance, a recent survey found that almost
the Company It Bought for $580 half of the region’s consumers now prefer mobile online payment to using cash or paying
Million,” by Eugene Kim, Cnbc.com,
April 30, 2019; “SOUQ Launches in person with a card.
‘Amazon Global Store’ Bringing Over Throughout its history, Souq has embraced mobile technology and social media to
One Million Global Products to KSA
Customers,” Press.aboutamazon. increase its worldwide visibility and bolster its branding and marketing efforts. It launched
com, September 13, 2018; “Amazon a mobile app in 2012, enabling customers to view detailed product information along with
Global Store Launch Is Just First Step,
Says Souq.com Boss,” by Shayan product ratings and reviews. For instance, from April 2018 to March 2019, mobile custom-
Shakeel, Arabianbusiness.com, ers represented more than half of all traffic on Souq.com and made 70% of purchases
August 21, 2018; “Noon.com Uses
Partnerships in Its Battle with Souq. across all of Souq’s markets of operation, justifying Souq’s emphasis on strengthening its
com,” by Hendrik Laubscher, Forbes. mobile platform.
com, August 6, 2018; “Dubai’s Noon
Expands with eBay Tie-up to Rival All of these improving conditions, investments, acquisitions, and upgrades generated
Amazon-backed Souq.com,” by significant interest in Souq from investors. In 2016, Souq raised more than $275 million,
Deena Kamel, Thenational.ae, June
12, 2018; “Platform for Success: the largest amount ever raised in the Middle East, giving it a valuation of over $1 billion and
Souq.com’s Ronaldo Mouchawar making it the first company from the MENA region to achieve the “unicorn” designation for
on His Winning Formula,” by
Lubna Hamdan, Arabianbusiness. companies worth $1 billion or more. Then, in 2017, after a bidding war between Amazon
com, May 24, 2018; “’There’s Still and Saudi-based Emaar Malls PJSC and its billionaire owner, Mohamed Alabbar, Amazon
a Lot to Do,’ Says Souq.con CEO,”
by Glesni Holland, Tahawultech. purchased Souq for a price variously reported as either $650 million or $580 million. The
com, April 15, 2018; “High Noon. deal gave Amazon access to emerging new e-commerce markets and allowed Souq to inte-
com: Battle for Saudi E-commerce
Market Begins,” by Katie Paul, grate with Amazon’s global seller and customer base.
Reuters.com, October 15, 2017; Wasting little time after the acquisition, Souq and Amazon announced the UAE launch
“Souq.com’s CEO on Building
an E-Commerce Powerhouse in of Amazon Global Store, which made over 1 million Amazon products available to Souq
the Middle East,” by Ronaldo customers. Souq expanded Amazon Global Store to the Kingdom of Saudi Arabia and
Mouchawar, Harvard Business
Review, October 2017; “Amazon Egypt in 2018. In 2019, Amazon announced the rebranding of Souq to Amazon.ae in the
Completes Its Acquisition of Middle UAE and several of the countries in which it operates, and in June 2020, also rebranded
Eastern E-commerce Firm Souq,”
by Jon Russell, Techcrunch.com, its Saudi Arabia operation as Amazon.sa, but thus far has retained the Souq.com URL in
July 3, 2017; “Amazon Confirms Egypt. Today, Amazon Global Store sells over 30 million products, including products sold by
Acquisition of Souq, Marking Its
Move into the Middle East,” by Amazon in the United States, and offers the option of shopping in Arabic on both the website

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and Amazon app. Similarly, Souq’s payment platform Payfort has also been rebranded to Ingrid Lunden, Techcrunch.com,
March 28, 2017; “Saudi Sovereign
Amazon Payment Services. Amazon has continued Souq’s marketing efforts on various Wealth Fund Launches Noon, Middle
social networks, and as of March 2021, SouqEgypt’s Facebook page has over 9 million fol- East’s Take on Amazon,” by Angela
Gonzalez-Rodriguez, Fashionunited.
lowers, while Amazon SA has over 4 million, and Amazon.ae about 2.4 million. The company in, December 15, 2016; “The
also maintains mul­tiple active Twitter accounts focused on different regions with different Middle East’s First Unicorn: Souq.
com’s CEO on Leadership, Timing,
“handles” such as @AmazonKSA (Saudi Arabia), @AmazonAE (the UAE), and @SouqEgypt, and Coping with Rejection,” by
with flash deals and other useful information. Elizabeth MacBride, Forbes, March
25, 2016; “Souq, Amazon of the
Despite the now rebranded Souq’s predominant position in the MENA region, competi- Middle East, Raises $275M From
tion remains intense. Amazon/Souq’s major online competitors include Noon, Wadi, and Tiger and More at a $1B Valuation,”
by Ingrid Lunden, Techcrunch.
Namshi. Noon is backed by Mohamed Alabbar and the Saudi Arabia Public Investment com, February 29, 2016; “Souq,
Fund. The company went live in the UAE and Saudi Arabia in 2017, with initial funding of Online Retailer in Middle East, Gets
a $275 Million Boost,” by Sara
$1 billion, and in Egypt in 2019. In addition to the deep pockets of its founders, Noon also
Hamdan, New York Times, February
has One Click Delivery Services, which it purchased to connect drivers with sellers needing 29, 2016; “Souq.com: Riding High
delivery. In addition, Noon has extensively used daily flash sales during the holiday season on the E-Commerce Wave,” by
Dina al-Wakeel, Venturemagazine.
to build market share. It offers 20 million products, including beauty, fashion, electronics, me, January 28, 2016; “Souq.
home, and kitchen, many under its own brand name. Noon uses Alabbar’s extensive infra- com Chief Explains One of Dubai’s
Biggest Online Success Stories,” by
structure of Emaar Malls to help deliver and store goods and integrates with the Alabbar- Jessica Hill, Thenational.ae, October
owned Aramex delivery service, as well as smaller e-commerce marketplaces Namshi and 7, 2015; “Ronaldo Mouchawar:
How I Created Souq.com,” by Ed
JadoPado. Noon has positioned itself as a homegrown, Arabic-first marketplace, and in Attwood, Arabianbusiness.com,
December 2019, Alabbar took a jab at Amazon, reportedly saying that it should go back April 5, 2014; “After Many Slip-Ups,
Mideast E-Commerce Gains Its
to Seattle. However, in mid-2018, it partnered with eBay to offer its customers a way to Footing,” by Sara Hamdan, New York
more easily purchase products from the United States and elsewhere. In 2018, Noon also Times, November 7, 2012; “Souq in
Egypt: Not Relinquishing Its Crown
announced that it was opening an office in China in an effort to build relationships with Anytime Soon,” by Omar Aysha,
Chinese brands and in 2019 signed an agreement with China’s Neolix to pilot the use of Wamda.com, October 18, 2012;
“Why Middle East E-commerce Site
autonomous delivery vehicles in Saudia Arabia and the UAE. Still, the MENA region is a fast- Souq.com Acquired Sister Site Sukar.
growing market with room for many winners, and Amazon’s offerings (Amazon.ae, Amazon. com,” by Nina Curley, Wamda.
com, April 29, 2012; “Refocus
sa, and Souq.com) are positioned to be a force despite competition from Noon and other of Souq.com Will End Auction
regional competitors. Service,” by David George-Cosh,
Thenational.ae, January 2, 2011.

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