E-Commerce in Egypt: A Market Overview
This is the second installment of a new series on Wamda discussing e-commerce trends in countries across the Arab world.
In Egypt, as in the rest of the Arab world, e-commerce startups still face some major hurdles to growth, including a lack of banking options, a general mistrust of online purchasing, and outdated or nonexistent government regulation.
In general, Egypt is a tough market, due to high computer illiteracy, a poor telecoms infrastructure, and weakened economic conditions – nearly a fifth of the population lives below the national poverty line, according to Freedom House. All of this is only compounded by political uncertainty since the revolution in 2011.
It's particularly tough to handle online payments; cash on delivery is a must for any successful e-commerce site in the country.
In 2010 only 10% of the population had bank accounts, 45% of the population, which is below 18, is ineligible for bank-issued cards, and in 2010 only 4% of Egyptians had debit cards and less than 2% had credit cards according to market research firm RNCOS and consultants at Oliver Wyman. The government’s lack of regulation or certainty around online payment legislation is a big obstacle to protecting online transactions as well; not much has been done since e-signature infrastructure was legislated in 2004 to make e-commerce payments more secure.
Many banks in Egypt won’t allow users to purchase products online with the credit cards they do have, due to a fear that consumers will ask for paybacks or refunds en masse, yet there are a few who do, with limitations (see below). Regional payment gateways are also on the rise in Egypt, and U.S. company PayPal plans to enter the Egyptian market this year.
Despite all of this, Egypt remains an incredibly appealing market for new e-commerce companies due to the low cost of doing business and the fact that Egyptians simply love to buy things online. Here's why:
- 22.4% use e-commerce to either buy a product or to pay bills online, according to Arab Advisors. Their data also shows that electronics are the most popular products purchased online in Egypt, followed by software, airline tickets and website subscriptions.
- The overall penetration rate of e-commerce in the Egyptian population is still low at 3.4% but Egypt’s online purchases are expected to more than triple by 2016, with Egyptians spending as much as $447.3 million on e-commerce, according to Euromonitor.
- Rising internet penetration- up to 44% in 2012 from 12.6% in 2006- will help, as will growing mobile penetration, which is up to a staggering 115% in 2012, from 24% in 2006. Smartphone penetration likewise has grown to 26% in 2012.
This bodes well for e-commerce sites, as Egyptians also enjoy shopping on their phones; an estimated 82% of smartphone users have researched a product or service on their phone, and 41% have used their smartphone to make a purchase, according to Google. M-commerce will clearly be a large part of any e-commerce company's strategy in Egypt over the next decade.
To take a snapshot of the current ecosystem, here's a look at the major e-commerce players in Egypt. This is not necessarily comprehensive, however; if you know of other e-commerce sites that belong here, please share them in the comments section.
- Cobone - In Cairo, Dubai-based Cobone only offers travels deals for Beirut, Abu Dhabi, Cairo and Jeddah.
- Dare n’ Deal – A leader in the Egyptian market.
- Dealazion – A mobile daily deals aggregator from Egypt.
- GoSawa - A Lebanese platform that has expanded to the Emirates, Egypt, Qatar and Saudi Arabia.
- Groupon – U.S. company, with UAE headquarters, expanding across the region.
- Hala Deals
- Offerna - A leader in the Egyptian market.
The below sites offer products across many categories.
- Alef Bookstores – Offers books for Egyptian consumers.
- Books.com.eg – Offers Arabic books for sale in a “Social Store” (Disclaimer: Wamda Capital has invested in this startup).
- The Book Spot – Offers books for Egyptian consumers.
- Cairo Books – Offers books for Egyptian consumers.
- Diwan Bookstores - Offers books for Egyptian consumers.
- Jamalon - Offers books for regional consumers.
- Cairo Sales Stores
- Computer Shop
- El Shennawy
- El Tamimi Stores
- Game Valley – Online video game retailer.
- OpenDayz – Aggregates products for online sale across Egypt and acts as intermediary between retailer and consumer.
- agzakhana.com – Cosmetics and wellness online store.
- Bkam – Price comparisons for e-commerce sites in Egypt.
- Egyrl.com – Products for women.
- Eshtery - A mobile-based virtual supermarket for Egypt.
- Hedeya – Childcare products.
- Mumzworld – Offers products for mothers and childcare.
The platforms below all offer time-limited deals for clothing and accessories.
Offline Stores Going Online
- Al Ghanem – Started in 1964, now with an online presence for electronics.
Online Classified Ads
The below companies allow users in Egypt to buy and sell products in several categories, from electronics to clothing, and handicrafts to gifts.
Available Payment Gateways
Check out our piece on the region’s payment gateways, to see an infographic on coverage and rates. All of these gateways work for paying customers in Egypt, but each may have a specific bank partner, which can be found on their individual website. In Egypt, options include:
- PayPal (coming soon)
- Wallety – A payment solution designed to make credit card purchases more secure.
- CashU – Offers a prepaid account.
- Gate2Play - Introduces online merchants to global payment gateways, and offers them other relevant services.
- Arab African International Bank – Has a partnership with Wallety for secure payment.
- Arab Bank
- Citibank Egypt
- Commercial International Bank of Egypt
- National Bank of Egypt
- National Société Générale Bank
The below offers complete e-commerce solutions which connects to available payment gateway solutions.
- ShopGo - Focuses exclusively on building complete ecommerce solutions.
The below are some companies in Egypt that offer design and web development solutions.
- Digital ITS
- eGo Solutions
- Egypt Web Solutions
- ElMotehada Web
You can tell from the lists above that the e-commerce ecosystem in Egypt still has a lot of room for growth, but the companies that have been successful so far can be a strong model for the next generation of e-commerce entrepreneurs. As long as innovators are able to overcome (or solve) the steep hurdles to e-commerce growth in the market, Egypt has the potential to be one of the largest customer bases in the region.