x Abu Dhabi, UAEWednesday 18 October 2017

Amazon begins direct sale of online goods through UAE portal as it looks to shake up retail

Low-cost goods go on sale after Souq.com purchase

Ronaldo Mouchawar, the chief executive of Amazon subsidary souq.com, said the acquisition of Wing.ae provides its customers with more convenience for same and next day delivery.   Ahmed Jadallah/Reuters
Ronaldo Mouchawar, the chief executive of Amazon subsidary souq.com, said the acquisition of Wing.ae provides its customers with more convenience for same and next day delivery. Ahmed Jadallah/Reuters

Amazon has begun selling products to UAE consumers through the recently-acquired Souq.com, as the world's largest retailer takes its first steps toward creating an online shopping culture in a country still dominated by bricks and mortar retail.

It began with a handful of Amazon-branded products this week but marked a significant step for shoppers that have long complained of hiked prices in the country's upmarket malls.

Experts said the move, which followed the purchase of Souq.com for $580 million in March, would begin give shoppers access to a service that has transformed global retail.

“While currently the range is very limited - basically featuring mobile and other consumer electronics accessories - we strongly expect that the range would be increased within the consumer electronics and travel accessories segments," said Rabia Yasmeen, an analyst at Euromonitor in Dubai.

At present, shoppers can order directly from Amazon but pay steep costs to 'shop and ship' goods or deliver through courier companies.

"The launch of AmazonBasics will give consumers access to a global private label at prices lower than Amazon.com," she said.

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AmazonBasics is the company's own brand of affordable products of everything from USB leads to kitchen utensils and Amazon-brand Apple Mac covers from just Dh29.

There are currently several dozen items from the range available on Souq.com, compared with about a thousand on AmazonBasics US website, with prices ranging from Dh20 to Dh60.

For example, an Apple certified lightning to USB cable costs Dh25; a laptop sleeve Dh29; and a gadget bag Dh65. Travel accessories such as a four-piece packing cube set are Dh55. Free shipping is available and there is also an extra 25 per cent discount on offer.

The move is the first clear link-up between Amazon and Souq since the US company completed its acquisition of the Middle East's largest online retailer. Users could already use Amazon accounts to login to Souq’s website.

Announcing the move, Souq founder and chief executive Ronaldo Mouchawar said the arrival of AmazonBasics meant UAE customers now could access a “great selection of best in class products at very affordable prices”.

But while the development is welcome for hard-pressed consumers, it raises the question of when local buyers will have direct access to services seen in other markets, such as overnight delivery from Amazon, plus Amazon Prime and Echo.

Amazon showed its economy of scale on Monday week when it dramatically slashed prices of products at the recently-acquired Whole Foods, the upmarket organic food chain, by as much as 43 per cent.

“The conventional supermarket has not evolved much in decades," Karen Short, an analyst at Barclays Capital, told Bloomberg.

"But Amazon will likely drive drastically different shopping behaviour in grocery. The survival of the fittest has begun.”

E-commerce in the UAE has been relatively small-scale in recent years, and shoppers still flock to malls boasting lavish food courts and other attractions. But, the expected arrival of new online marketplaces such as the $1 billion investment Noon.com business will likely change that.

Consultants AT Kearney expect e-commerce in the UAE to grow at a compound annual growth rate for 25 per cent per year up to 2020, with Frost and Sullivan estimating the market could be worth up to $10bn by next year.

"Anyone who executes the correct way in the next couple of years can get into the big league," said Pratik Gupta, co-founder of Wadi.com, an online market platform that launched with great fanfare in Saudi Arabia and the UAE in 2015, earlier this month.

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