The global e-commerce giant Amazon acquired Souq.com last year and has helped it grow strategically in the e-commerce space ever since. Amazon and Souq.com are clearly advancing towards innovative ideas and technologies and this is taking them towards a new integration level offering wide range of products and offerings to their consumers. Souq.com employees have equally benefitted with these upgraded and advanced technologies that they have gathered through Amazon.
Souq.com was founded in 2005 when Middle East was a very new place for e-commerce. Operating e-commerce space in the Middle East was not an easy task but souq.com brought about this change and was sure it had enormous potential to operate into this space. In a country with strict legal customs and laws, logistics issues and slower broadband penetration rates, it was not easy to operate as an e-commerce player. However, slowly and gradually souq.com became the largest e-commerce website in the Middle East and now operates in close to 7 countries as off now. However, the company has scaled new heights after its acquisition with Amazon.
After the acquisition, Souq.com has benefitted in numerous ways. The company can now provide wider range of products to its customers with better prices, faster delivery and improved customer services. Souq.com has definitely improved a lot also in terms of its sales growth ever since it got acquired by Amazon. But, if we compare the online retail sales they still stand at 2% when compared with other western e-commerce spaces. The acquisition which accounted for around $850 million has brought lot of limelight for this UAE giant Souq in terms of innovation and technological advancements and the company is still on the path of growth.
Souq has come a long way since the time it was started. The best thing which clicked behind the acquisition of Souq by Amazon were a lot of commonalities between the two as both of these are technically equipped businesses. Souq’s culture and values, customer centric operation methodology, innovation and technology matched a lot with the culture and values of Amazon. Though, Souq is a great e-commerce retailer in the Middle East, but with a global brand like Amazon which rules the global economy in the e-commerce space, the company has a long way to go. Even the employees of Amazon have been practically exposed to access advanced technologies and innovative ideas of Amazon.
As per the current scenario, retail sales account to be only around 2% but, if this is compared with the western economies, USA accounts for 8%, China at 15% and Europe stands at 12%. Souq would now be able to access all these markets through the expansion it had through Amazon. So after this acquisition, Amazon customers are able to login to Souq.com with their Amazon credentials and another major benefit is Souq vendors and customers having access to a gamut of products and offerings of Amazon. Souq sellers can also sell their things on a wider platform now through Amazon.
As per the CEO of souq.com, Mr Ronaldo Mouchawar despite the current 2% retail sales in Middle East, there has been a “significant acceleration” in the e-commerce space especially in the last 3-4 years. He owes the credit of this acceleration to the young and dynamic youth who are one of the major consumer segments on online shopping. When Souq was launched they were just limited to a website, but they came up with their first app in 2012 and with the enhancement of digitization and increased usage of smart phones, around 70-80% of the payment transactions and shopping has started happening via smart phones.
Customer preferences and choices have also changed drastically over the last few years. UAE being a cash-based economy relied majorly on cash payments and hence, accepting online transactions was also one of the hurdles faced by Souq. Around 75-80% of the economy in UAE is still relying on cash transactions but slowly consumers have started adopting digital payment apps. Earlier in places like Egypt and Saudi Arabia holders of credit cards were very less in number and hence, customers were always very reluctant to do online transactions. But, with time, increase in connectivity and easier and better access to seamless online transactional processes more and more customers have started relying on online payments now. Cash on delivery was a very popular feature of Souq.com but for the first time ever, after the acquisition online payments have surpassed the cash on delivery transactions of Souq.
Delivery was another major hurdle for Souq but, the company overcame this challenge too very smoothly. Many of the cities in UAE do not have postal codes and hence, delivering products was always very troublesome so the company used a tech-enabled delivery setup system and used to geolocate clients. But, with uninterrupted internet connectivity and more and more people relying on mobile apps now delivery has become very easy and convenient for the company. After getting linked with Amazon, which is known for its amazing and fast delivery services SOUQ has benefitted a lot. Earlier, Souq used to deliver products in 3 to 5 working days which has reduced to 2 to 4 working days now and this is a very big factor after this Amazon Souq deal.
The CEO of Souq still believes that they are in “day one” phase as of now as there is a lot to learn and adapt from Amazon and the integration process is still on. The company believes to get higher profit margins and also set up new levels in e-retail space after this tie-up with Amazon.