Capitalizing on ecommerce: lessons from RiseUp
Ecommerce in MENA is a hot industry as it becomes ever easier to launch an online shop, and with speculation growing that it could be the source of the region’s first unicorn.
At last week’s RiseUp Summit in Cairo ecommerce was one of many sectors under discussion, but some of the industry’s top names were present and they held forth on the future they see for online buying in MENA.
It’s estimated that 35 percent MENA’s 381 million inhabitants have access to the internet, but only 12 percent of those buy online, said Souq.com’s Egypt general manager Omar Elsahy.
Souq.com's Omar Elsahy says marketplaces are one source of huge ecommerce growth in MENA. (Image via RiseUp)
“Although the numbers might seem in-appreciable, they are persistently growing. We think this is a good thing, because they indicate there are still huge growth opportunities in the ecommerce market in the region,” Elsahy said, thanks to MENA’s large, young population who are growing source of mobile traffic.
There has been a six fold increase in mobile ecommerce in the region in the last five years, reaching $3 billion this year.
Future trends: marketplaces and fintech
Experts at RiseUp believed that networked marketplaces and innovative mobile fintech ideas would be the two most important trends affecting the market over the coming years, as people looked for new income streams to support them.
A networked marketplace is a new category of digital communities that combines the best elements of social networks, like Facebook, with a marketplace that facilitates transactions among multiple buyers and multiple sellers, like eBay.
What differentiates networked marketplaces from regular ones is that they provide the added benefit of projecting a person’s identity through a digital profile. This provides for a long-term relationship between buyers and sellers, not just a quick transaction.
Elsahy described Souq.com as a networked marketplace, where more than 70,000 sellers are delivering their products to buyers.
Other less conventional marketplaces, such as Uber and Airbnb, are offering similar opportunities for locales to unleash the business manager within.
As more of these networked marketplaces develop, the need for innovative and seamless financial systems will become even more pressing, said Zoomaal chairman Elias Ghanem.
“Nothing is more troublesome than having no cash available in your pocket, nothing is more troublesome for the seller than going to a third party to collect his money,” Ghanem said.
He also expects the point of sale (POS) machine to totally vanish soon, describing it as “the most useless financial solution”.
“We don’t need a third party machine to transact. We all have phones,” he said.
Startups could develop on rising smartphone rates in certain parts of MENA to develop more efficient financial - and mobile - financial products, he said, but they did need to be aware that successful solutions needed good consumer engagement in order to increase conversion rates.
Zoomaal chairman Elias Ghanem during his RiseUp talk. (Image via Ahmed Gabr)
Strategy you can use
Innovety partner Sherif Makhlouf said that even established ecommerce companies could still benefit from basic business tactics to improve conversion rates - or the number of people who actually follow through with a purchase.
“Customer acquisition cost must be less than the customer’s lifetime value,” he said, on what he thought was the most important business equation for ecommerce startups.
Makhlouf said conversion rates could be improved by paying careful attention to the fine details of websites and ensuring they had great content.
“The content is the digital sales people.”
Furthermore, building a social proof was one of the most successful approaches startups could use to convince customers to buy: 'social proof' comes in the form of supportive evidence from a customer’s local community that he’s getting a good deal: customers loved to see a list of their friends who bought from the same ecommerce website.
Other useful strategies to improve conversion rates include inducing a sense of urgency, where customers are stressed to buy something before it’s gone, or before it gets more expensive, as well as remarketing and retargeting which is where businesses use ads to remind the customer of the product he once searched for.
And finally, knowing your customers inside and out was crucial to the ability of an ecommerce business to increase the lifetime value of customers.