| Kuwait | Feb 22, 2016
There is a growing e-commerce sector emerging in the Gulf, with Kuwait showing signs that it could be on the verge of a digital retail boom.
What happens when you take consumers with already strong purchasing power and shift their buying habits to the online sphere? The answer is an increase in total sales. In one of the highest valued growth forecasts of all e-commerce industries worldwide, the coming GCC e-commerce boom is expected to achieve an overall sales value of up to $41.5 billion across the region by 2020, according to market researchers Frost & Sullivan
That is exactly what is happening in the GCC, with Kuwait among the top markets ready to take the leap toward embracing more e-commerce activity in everyday life.
Kuwait enjoys one of the highest per capita incomes in the world, with internet penetration rates that also rank among the highest in the region. The country’s mobile and digital economy continues to grow with plenty of room for even more enhanced connectivity. When compared to the UAE, the leading Gulf state in terms of ICT infrastructure, Kuwait lags behind in areas such as broadband, fiber optics, and smart services, suggesting that once these gaps are filled, by either government or private sector investment, the adoption of e-commerce will naturally follow.
Consumer ability and willingness to shop online in the Gulf has been growing notably in Saudi Arabia, where the mammoth e-commerce platform from China, Alibaba.com partnered with the Makkah Chamber of Commerce, an example of how foreign e-commerce players are moving in and taking advantage of market potential, creating new sales channels for multinational businesses, and opening up new markets for GCC consumers.
Similarly, ensuring that the correct ICT, transport, and logistics infrastructure are in place to support an e-commerce revolution in Kuwait will depend on government support. The need to upgrade government policies to reflect e-commerce business models represents one major initial obstacle, while the integration of digital payment mechanisms such as PayPal in Kuwait will be key to any serious development of the segment. Along with the adoption of e-commerce portals by businesses operating in the country, the upgrading of traditional distribution channels will also help to create a scenario in which consumers will increasingly shift to online purchasing methods. E-commerce in Kuwait is still an immature market, but in line with global trends, and with the increasing digitization of services in daily life, it is just a matter of time until businesses and consumers embrace the technology in a big way.
In a GCC e-commerce market estimated to be worth $41.5 billion by 2020, it is not certain how much of a share Kuwait will be able to take. However, the establishment of IBM’s first Kuwait office in 2015 has led many in the industry to conclude that the Kuwaiti ICT sector is on the up. As Kuwait moves closer to becoming a knowledge-based economy, per capita online retail spending will continue to rise, while various smart initiatives are likely to create the necessary circumstances for sectoral expansion over time.