How to Be Successful in the MENA Markets
For most, the Middle East North Africa (MENA) region remains a mystifying yet rapidly emerging market that is gaining considerable momentum, specifically in the e-commerce and technology sectors. The region’s fast-maturing technology and luxury goods industries have drawn an abundance of tourists, entrepreneurs, and start-uppers to the region making it one of the most popular hubs for wealth and business. A recent report of the e-commerce market growth in the Gulf Cooperation Council (GCC) – the political and economic union consisting of Arab states – is projecting a staggering 38% e-commerce growth rate in the United Arab Emirates (UAE) and a 42% growth rate in the Kingdom Saudi Arabia (KSA) alone.
Despite rising e-commerce activity in the region, cash and cash-on-delivery (COD) systems are still heavily cemented in these economies. A consumer insights report by HSBC points out that “a large percentage of the local population has relatively modest income and do not have credit cards” and that many e-commerce merchants still see a significant portion of their sales from cash payments. So while credit and debit card adoption is steadily growing, there is still an uphill battle before it unseats cash as king.
For many, this is good news. E-commerce has just started to penetrate the region which means lucrative opportunities to attract a new customer base with disposable income, spending potential, and willingness to adopt new payment methods.
As payments experts in this region, we’re sharing some valuable tips on how to get your business up and running, reduce growing pains, and guide you on how to successfully break into the MENA market.
1. Get familiar with Mada - Saudi Arabia’s payment system, Mada, connects all merchant and card issuer banks to transactions from automated teller machines (ATMs) and point-of-sale (POS) terminals in the kingdom. Earlier this year, Checkout.com was the first payments solution provider that enabled all Mada cardholders to make online payments for the first time so merchants can accept Mada on their website or app – helping key e-commerce companies embrace the change. With over 30 million Mada cards in circulation and a billion transactions routed through the Mada network every year, the new online capabilities are expected to fuel e-commerce growth across Saudi Arabia by introducing a new level of convenience.
2. Establish trust- Establishing trust in the GCC is vital for a successful launch. According to a report by Statista, lack of trust was cited as the most common e-commerce issue for MENA consumers in recent years. One way to build trust and legitimacy in your new market is to speak the local language. For example, you’re sure to win more customers if your company is equipped with a customer service team who can speak Arabic and making sure your website and app are written in the local language. This is particularly beneficial when doing business in Saudi Arabia; there’s more leniency in the UAE since the population has more English-speakers.
Trust can also be enhanced by featuring logos of familiar payment companies like the mada logo for Saudi Arabian sites or K-Net in Kuwait to give the website more credibility. Adding peer and product reviews will also enhance confidence in consumers.
Safety and security are also major concerns for consumers – 62% of consumers surveyed in a recent PwC retail report of the Middle East said they were concerned about having their personal information compromised. So be sure to invest in security measures and select partners with robust security frameworks in place, like Checkout.com’s Fraud Detection Pro. Adding security and verification logos like those from Visa and Mastercard will also enhance trust, particularly on the payment pages where users enter their personal information.
3. Understand payments and delivery - Navigating international payment rules and regulations on your own can be a headache. You’ll save a lot of time and money by working directly with a payment service provider (PSP) who has established acquiring partnerships, accept local payment methods in the region, and can handle most of the payment process for you. A smooth checkout experience, order tracking, and fast delivery are also crucial – as seen in the graph above, delivery issues were cited as the second most common e-commerce issue for consumers in this region. In MENA, there is a clear correlation between the delivery time of an order and a customer’s willingness to accept the product. Consumers, especially young consumers, will often change their minds – so the sooner they receive it, the more likely they will commit to the purchase.
4. Addresses aren’t what you think - Forget everything you know about the postal system. In GCC regions, one’s office address will most likely be their primary address for receiving post and packages. However, there are some delivery systems that will deliver mail directly to your home or preferred address, but it's a service that you’ll have to pay for. In the UAE, there are also no zip codes or postal codes. But don’t worry too much, there is some method to the madness – most people find their way around by using landmarks and iconic buildings as reference points.
5. Up your social media game - Half of the MENA population is below the age of 30, and in the Kingdom of Saudi Arabia, even higher at 67% of the population. This group has an insatiable appetite for social media and are the hungriest consumers of social content in the region. Invest in your social media presence by partnering with local influencers to establish reach and brand trust in your new market. Running social media ads and implementing direct-to-checkout functionality on popular social platforms can also shorten the customer journey and ultimately help boost conversion rates.
6. Mobile-optimize - According to the same retail report by PwC, 41% of Middle East consumers say their mobile device is already their main tool for purchasing online. While some people may not be buying directly on their smartphones just yet, many consumers still use their mobile device for comparison shopping and reading product reviews. Mobile-friendliness can mean having an app or making sure that your website is designed dynamically to adapt to mobile screens. If your business is app-based, be sure to work with payment solutions providers like Checkout.com who are accustomed to processing a high volume of transactions to ensure efficiency in speed and security – and are also set up to accept payments through Apple Pay.
Expanding your business internationally can be a daunting task – building your presence, particularly in emerging markets, can pose some unexpected challenges and friction points without the right knowledge and resources. But following these tips will give you a head start in expanding your operations to the Middle East and help you avoid some common roadblocks.
Interested in taking your business global? Talk to one of Checkout.com's payments experts for more information on expanding your global footprint to MENA and many other regions worldwide. Contact Us.