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Abu Dhabi, UAEWednesday 20 February 2019

Amazon downplays Souq as it seeks to launch own Middle East platform, according to report

US giant is telling sellers in North America to make sales to Middle East customers through its main website instead of the UAE platform

Amazon is pursuing expansion in its international markets. Reuters
Amazon is pursuing expansion in its international markets. Reuters

Nearly two years after buying Souq, the Middle East's biggest online marketplace, Amazon is downplaying its UAE brand and preparing to launch its own platform in the region, according to a report from US broadcaster CNBC.

According to the report, Amazon is telling some of its largest sellers in North America to make sales to Middle East customers through its main website instead of on Souq.com. It is promoting a single e-commerce brand and back-end system for Amazon in the region, while also encouraging more US-based sellers to expand in the UAE and Saudi Arabia.

Wissam Kamel, head of PR and communications for Amazon Middle East, responded to an email query from The National saying: "We have no comment, as we do not comment on rumours or speculation".

Ronaldo Mouchawar, chief executive of Souq, also declined to comment.

The Middle East is a huge potential market for Amazon – an opportunity it seized when it made its largest-ever international acquisition with its purchase of Souq for $580 million (Dh2.13 billion) in March 2017.

The region’s e-commerce sector is growing at the fastest pace globally, with online sales expected to double to $48.8bn by 2021, according to a report by Fitch Solutions Macro Research. E-commerce spending in the UAE is expected to increase by 170 per cent to $27.1bn in 2022, from $9.7bn in 2017.

Amazon has room to grow in its international markets. While it dominates in the United States – where it accounted for about one in two e-commerce transactions last year and more than two-thirds of the company's revenue – it has struggled to find a successful formula in countries abroad. Excluding the US and Canada, Amazon is loss-making.

Losses from its international operations were $642m in the fourth quarter, the e-commerce giant said on Thursday. Though its international operating loss shrunk from $919m a year earlier, according to Reuters, regulations in India, where the company plans its biggest international expansion, are changing to favour local e-commerce sellers over those that are foreign-owned. This could mean that Amazon may have to look elsewhere for international growth.

According to CNBC, it is not clear whether Amazon plans to close Souq or is attempting to funnel traffic and sales to its main website.

For now, Amazon still lists dozens of job openings from software developers to vendor managers for Souq, with positions offered in Amman, Cairo and Riyadh.

Souq is also expanding and plans to hire 600 new people in Dubai this year.

Updated: February 4, 2019 04:06 PM

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