The acquisition of Souq.com by US-based online retailer Amazon is likely to trigger more interest in the region from other international players, according to a senior entrepreneur.
Souq, the Middle East’s biggest e-commerce site, was sold for an undisclosed sum to Amazon in March. Reports estimated the figure to be between $580m and $750m.
Speaking to Gulf Business on the sidelines of a recent event in Dubai, Fadi Ghandour, chairman of Wamda Capital and founder of Aramex, said that the deal was a “fantastic thing for the region”.
“It’s a confirmation of all the things that we have been doing for the past 15 years. It just takes Amazon to make the statement that there is something happening in the region in the digital space, in e-commerce. And it’s a vote of confidence in the region,” he said.
He also affirmed that more acquisitions were likely.
“There is more money that will come into the region. The Amazon deal will bring more money to the region from big international names. Alibaba is going to be interested in the region,” Ghandour said.
With a market value of $264bn, Chinese e-commerce giant Alibaba Group has over 450 million customers.
And the rapidly expanding company has been on an global acquisition spree in recent months.
On Thursday, it was reported that Alibaba’s affiliate, Ant Financial, had acquired Singapore-based payment service helloPay. In March, the Chinese company also invested $177m for a 36.31 per cent stake in the online retail unit of Indian tech group Paytm.
The Middle East has seen a boom in the e-commerce sector – especially in countries like the UAE – over the last few years.
“Amazon is a giant outside the region and the fact that they are trying to expand their footprint in this region and invest into a startup that came out of the UAE is a very good sign of the maturity in the market when it comes to digital services,” stated Samer Geissah, vice president – Consumer New Business and Innovation at du.
“And with Amazon coming in and rumours that Alibaba and others are coming in, the focus is going to be on the digital services and the ecosystem that supports them. And to be in this ecosystem now is the right time. I think there will be exponential growth in the next few years and what we need is a system, a structure and information being shared openly in order to ensure that this is a smooth transition and that majority of people are benefitting from it,” he added.