Consumer e-commerce in Qatar: Moving towards cashless transactions
The e-commerce market in the Gulf Cooperation Council (GCC) continues to be a trending topic, having seen a five-fold growth rate over the past five years – from USD3.3 billion (QAR12 billion) in 2010 to USD15 billion (QAR55 billion) in 2015, according to a report by AT Kearney. Qatar, where the e-commerce ecosystem is currently in a fairly nascent stage in comparison to other GCC countries such as the United Arab Emirates, Kuwait and Saudi Arabia, represents significant potential for growth and development, writes Raghav Prasad.
Currently, regional and international players including Souq.com and Amazon, which have proven to be extremely popular since nationals and expatriates alike look to discover new brands and products that may not be locally available, dominate the consumer sector of e-commerce in Qatar. Meanwhile, local and regional e-commerce providers such as Talabat and QTickets have addressed consumers’ preference for increased convenience when it comes to transactions. We often tend to think of e-commerce primarily in terms of consumer consumption. However, there is a large part of e-commerce that revolves around government spending. This category will continue to grow in Qatar, as entities such as Kahramaa widen their offerings via multiple payment gateways to make electronic payments simpler and safer for their customers.
A 2015 study carried out by MasterCard on online shopping behaviour in Qatar revealed that 55 percent of respondents had made an online purchase during the three months prior to the study, of which 90 percent were satisfied with their online shopping experience. The study also found that mobile shopping is steadily on the rise with three in 10 respondents having made online purchases through their mobile phones during the three months prior to the study. The future of e-commerce is mobile and we expect mobile shopping to continue to rise in popularity in the GCC in the coming years as the availability of mobile wallets such as MasterPass becomes more widespread.
The survey also found that online spending in absolute terms in Qatar is highest for airlines, followed by digital content for entertainment purposes, and groceries. Clothing and accessories, home appliances and electronic products are other categories that were popular among respondents. Of the survey respondents, 76 percent singled out factors such as convenient payment methods, value of items and security of the payment facility.
2016 is likely to see an increase in growth of e-commerce in Qatar as the awareness of the benefits of shopping online continues to spread among consumers. As it stands, a large proportion of e-commerce payments are carried out via cash-on-delivery, which is partly due to a lack of awareness around the increased safety and security of electronic payments compared to cash. The biggest opportunities exist in cross-border e-commerce, and the next big shift that will change things is when the major regional and international players find a way to address the logistical challenges that prevent goods from being delivered efficiently to Qatar’s residents.
As the diversification of the economy from hydrocarbon progresses in the next five years, with developments unfolding in the aviation, education, tourism and sports sectors, both the government and the Qatar Central Bank are committed to modernising e-commerce.
The size of the opportunity for electronic retailers (e-tailers) in the GCC is significant, with Google saying that the region’s digital space currently only accounts for about one percent of retail spending, compared to more mature markets. Beyond e-commerce, the growth opportunity becomes even more evident when one considers that approximately 85 percent of retail transactions are still being performed using cash. Organisations are gradually seeing the benefits of a cashless society and, with time and careful planning, the industry is leading a change in behaviour towards a world beyond cash.