Amazon announces agreement to buy Souq.com
Amazon, the world’s biggest online retailer, yesterday confirmed its acquisition of Souq.com, the Middle East’s biggest online retailer.
The US online juggernaut did not reveal the terms of the deal, so it is not yet known whether the price paid exceeded the last-minute US$800 million tabled by Emaar Malls. Souq.com will keep the same leadership, name and brand identity for the forseeable future, it said. The region’s biggest e-commerce platform has 8.4 million products and will now have access to Amazon’s global platform and its faster delivery systems to cut delivery times.
“The price was good enough to make our shareholders happy,” said Ronaldo Mouchawar, the chief executive of Souq.com. He said Emaar Malls’ bid came after the deal was signed with Amazon. “Souq.com now has the best innovation and tools for online retailers in the world. We shall now be able to meet the wants and timelines of any consumer in the region.”
The move here by the most one of the world’s most disruptive online players will fiercely challenge the more traditional bricks-and-mortar players here.
“Traditional retailers are facing tough global competition from disruptive e-commerce players,” said Paul Cuatrecasas, the chief executive of Aquaa Partners, an investment banking firm dealing in mergers and acquisitions. “This latest deal shows that the UAE and the wider region may be one of the next battlegrounds.
“Online players, like Amazon, have radically disrupted the market. Customers now expect to be able to purchase the majority of their goods online with a single click, and have them delivered overnight or even within a few hours. In the past, traditional bricks-and-mortar retailers have struggled to compete with Amazon on these fronts.”
It is not only the region’s traditional retailers that will be concerned at Amazon’s move.
“The deal will not affect the market in the short term,” said Ulugbek Yuldashev, the chief executive and founder of Awok.com, an online retailer. “In the long term the smaller players will try to specialise and look into very dedicated segments rather than looking at multiple segments. The e-commerce market in UAE has grown drastically over past couple years by almost 50 per cent year-on-year. With the entry of Amazon the penetration of e-commerce will increase from 1 to 1.5 per cent currently to almost 4 to 5 per cent by 2020-21 in the Middle East.”
The flourishing of the country’s e-commerce ecosystem has been welcomed from all sections of UAE society.
“I am sure Amazon will make many changes to Souq.com,” said Diya Ayu, an Indian resident in Abu Dhabi. “I will be very happy if Amazon services are available through Souq.com and definitely shop more online.”
Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, said: “Amazon’s entry into the region reflects the visionary foresight of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, who launched Dubai Internet City in 1999 and adopted the e-commerce and online business legislation of 2002.”
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Updated: March 28, 2017 04:00 AM