GCC: B2C e-commerce expected to cross US$ 1 billion mark by 2008

B2C e-commerce (business to consumer electronic commerce), particularly the e-shopping segment, in the GCC is set to witness a boom over the next few years, crossing the US$ 1 billion mark by the year 2008, with Saudi Arabia and the UAE leading the table.

Of the total B2C e-commerce transactions, more than one-third would be cornered by online bookings for airlines and hotels. The other popular categories for online shopping were books, clothing, gifts, flowers, electronic products including music CDs and DVDs, computer software and hardware, according to a report released by Dubai-based Madar Research Group.

The forecast of rapid growth in Internet shopping is based on the rising rate of Internet penetration in the GCC. There were 4.7 million Internet users in GCC countries in 2003, showing 50 per cent over the previous year.

Although average Internet penetration in the region was just 13 per cent in 2003, there are indications of further dramatic growth in the short term.

"Globally, B2C e-commerce has seen remarkable growth, despite the setbacks suffered by a few players. Independent studies estimate that the global B2C e-commerce market would be worth more than US$ 428 billion by the end of 2004," said Diyaa Zebian, Regional Manager, Middle East & Egypt, eSolutions BEA.

BEA is the world's leading application infrastructure software company that plays a key role in facilitating global e-commerce through cutting-edge web-based solutions.  "With secure payment systems in place and the respective governments' efforts to accelerate Internet penetration, the GCC is poised for a dramatic growth in B2C transactions," added Zebian. "BEA, with over 15,000 satisfied customers around the world, is well equipped to power the e-shopping revolution that is sweeping the world. In the Middle East, we have gained a large customer-base for our next-generation products and we expect the demand to go up considerably with B2C gaining momentum in the GCC."

The Madar study reports several trends that indicate strong growth for B2C segment. Most companies in the GCC have started building virtual showrooms where customers can login to the company website, browse through the products and services, and make their purchase online. In the UAE alone, there are over 30 companies offering B2C platforms.

Madar Research estimates the B2C market to reach over US$ 1 billion by the end of 2008, with a compound average growth of 22 per cent over the five-year period. The highest growth is expected to take place in Kuwait (30 per cent), followed by Qatar (25 per cent).

The study further shows that online bookings for airlines and hotels made up 34 per cent of the total B2C e-commerce transactions in the GCC in 2003.

By the end of 2008, the share of travel and hotel sector is projected to be 37 per cent of total B2C e-commerce market. This is because inter-GCC tourism is the fastest growing segment in the region's tourism industry.