Is creating an online store right for you? If you answered yes then be prepared to pay for it, with some cash and a lot of patience. The Middle East consumers are savvy online shoppers. They buy online and they buy often. What's lacking is the number of companies that offer online shopping as an option, and as a result consumers in the region are looking to sites based outside, which do offer e-commerce. In a 2010 Nielsen study on online shopping, "the most popular products and services for planned online purchases across the Middle East, Africa and Pakistan region are books (29%), airline tickets/reservations (24%) and electronic equipment such as TVs and cameras (23%). In particular, 27% in the UAE intended to book travel and buy clothing at the time of the survey. And to think these figures were posted thin 2010 imagine what those numbers are right now. There are more websites in the region that have an online purchasing function. Sites that offer group shopping discounts paved the way for more consumers to favor buying online. However, there is still huge potential for the online shopping industry to expand. Some have arguably pointed out that the lack of standard online payment infrastructure hasn't helped develop this segment. "Setting up an e-commerce site is very cumbersome in the Middle East. Working with banks to get an online transactional site takes a long time and a lot of red tape," says Sagar Shetty, managing partner, Clique Communications Group. Saman Hamidi, founder of marcoms agency Polar Bear, underlines this issue, saying that "one of the biggest problems that we face in this region, is the fact that e-commerce, although it has been around for a long time internationally, is just starting to become a topic for discussion here. As such most of the trade regulatory institutions, financial institution, even telecom providers are just starting to set up systems and procedures to support such demands." Shetty suggests alternatives like PayPal or CashU. "The first step is to get the user journey right when designing an e-store.
Next, choose check-out software that has minimal steps to payment. Then, choose the payment gateway, which would either be a bank's payment gateway or alternatives like Paypal and CashU." Once you've sorted out the payment structure, you will then have to tackle the logistics of delivering the product to your customers. Should you decide to secure a bank's payment gateway, note that the Department of Economic Development (DED) has recently released strict guidelines for what types of businesses are allowed to sell their products or services online. In turn, banks will not give you access to their facilities, if you do not have a certificate letter from the DED. Some banks also require you to have a AED 25,000 security deposit with them in exchange for gateway access, on top of the 5% charge per transaction. Hamidi suggests that these restrictions may have been put in place to keep the companies at bay because there is no proper infrastructure yet. "In my opinion, these "restrictions" have been in place until now, to pretty much keep companies from engaging in activities that the institutions are not ready to handle yet. I am confident that this will change with time." Hamidi shares a quick list for eShop set up:
Next, choose check-out software that has minimal steps to payment. Then, choose the payment gateway, which would either be a bank's payment gateway or alternatives like Paypal and CashU." Once you've sorted out the payment structure, you will then have to tackle the logistics of delivering the product to your customers. Should you decide to secure a bank's payment gateway, note that the Department of Economic Development (DED) has recently released strict guidelines for what types of businesses are allowed to sell their products or services online. In turn, banks will not give you access to their facilities, if you do not have a certificate letter from the DED. Some banks also require you to have a AED 25,000 security deposit with them in exchange for gateway access, on top of the 5% charge per transaction. Hamidi suggests that these restrictions may have been put in place to keep the companies at bay because there is no proper infrastructure yet. "In my opinion, these "restrictions" have been in place until now, to pretty much keep companies from engaging in activities that the institutions are not ready to handle yet. I am confident that this will change with time." Hamidi shares a quick list for eShop set up:
1) Acquire a certificate from the Department of Economic Development (DED) that says your company and website can handle online transactions. It is advisable that you get this certificate even if you opt out of the banks' payment gateway, to avoid potential fines later.
2) Approach the banks and payment gateways with DED certificate in hand. Ask for a price rate.
3) Sync your website's shopping cart system to that of the payment gateway with which you have recently partnered.
4) Plan your deliver and/or pick up logistics. Think about the best way to deliver your products, the most efficient way to store them, and possibly what the contingencies are for products that are returned or exchanged. "An online store in some ways has a little more hassle to deal with than an old fashioned brick and mortar business," says Hamidi, who recollects that one of his clients, who runs an online electronics shop, used to complain about the number of lost and stolen items that would disappear from his inventory.
