E-commerce, digital payments set for major growth in 2021 across MENAP region

Published 14 Nov,2020 via Daily News Egypt - The e-commerce and digital payment industries in the Middle East, North Africa, and Pakistan (MENAP) region are set for major growth in 2021, with nearly half of consumers likely to increase their online shopping over the next year, according to a report released on Saturday by Checkout.com.

The leading global payment solution provider said in its “Connected Payments in MENAP” report that the region, which has historically been dominated by cash payments, presents a significant growth opportunity for the digital payments industry. This comes as the region’s online shoppers now prefer using digital payments rather than cash on delivery.

The report draws insights from a regional survey, which polled more than 5,000 consumers in September 2020 in the UAE, Saudi Arabia, Egypt, Jordan, Qatar, Kuwait, Bahrain, and Pakistan.

Across the eight countries, 47% of consumers say they expect to shop online more frequently over the next year. Only 15% expect their online shopping frequency to decline, while the remaining 38% expect it to remain about the same as now. The likely surge in e-commerce and digital payments in 2021 is consistent across the countries surveyed, from 49% of the GCC consumers saying they will shop online more frequently, to 48% in Jordan, 47% in Egypt, and 39% in Pakistan.

Online merchants can expect certain demographic groups to drive growth more than others, particularly the most affluent consumers (56%), those already shopping online at least on a monthly basis (55%), men ages 35 and older (55%), and those using digital payments rather than cash or bank transfers to pay for their online purchases (54%).

“While there has been a sudden surge in e-commerce and digital payments this year due to the impact of COVID-19, our report suggests what we are seeing today is more than a temporary change in consumer behaviour,” said Sebastian Reis, EVP of Global E-commerce at Checkout.com, “Our internal data shows an 86% increase in digital payment transactions on our platform since the start of the pandemic in the region.”

Reis added, “This presents a major opportunity for businesses across the MENAP region. However, to leverage this shift in consumer behaviour, and to succeed in what’s already a highly competitive space, businesses will need to offer not only the products and services consumers look for, but also the best online shopping experience, including payment processes that are safe, secure, and convenient for consumers.”

The Checkout.com report also shows that the region’s consumers have embraced e-commerce nearly universally, with 90% saying they shop online, including nearly half (44%) doing so at least on a monthly basis. According to the report, the novel coronavirus (COVID-19) is driving a significant share of the current e-commerce and digital payment transactions in the region, as 40% of online shoppers say they are buying and paying online because of the pandemic.

Moreover, 45% say they are now purchasing products and services online more frequently than they did before the start of the COVID-19 outbreak.

The pandemic is accelerating growth particularly in the online purchases of prepared meals (41% report higher online purchasing frequency since COVID-19), clothing (37%), groceries (33%), and electronics (30%). While online orders of prepared meals and groceries appear to have surged evenly among males and females, men seem to be driving most of the e-commerce growth in electronics, and women account for a stronger increase in online clothing purchases.

The report further reveals that about 53% of the region’s consumers often pay for their online purchases using digital payments rather than cash on delivery (36%) or bank transfers (10%). Digital payments are by far the most preferred payment method with online shoppers in the GCC, including Bahrain (74%), Qatar (66%), the UAE (64%), Kuwait (59%), and Saudi Arabia (54 per cent). Meanwhile, cash on delivery is the preferred payment method in Pakistan (66%), Egypt (54%), and Jordan (51%).

Preference for digital payments over cash on delivery or bank transfers rises significantly as consumers shop online more frequently. Among those who shop online at least once a month, 62% usually pay by card or digital wallet, versus 44% among the less frequent online shoppers.

Regardless of how one pays for their online purchase, the report makes it clear that the payment process is central to the online shopping experience in the region. Nearly half (48%) of online shoppers across the region says that a safe, secure, and convenient payment process is the most important factor for their online experience aside from price. Payment process ranks higher than fast delivery/shipping (32%) or an easy return process (15%).

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