Amazon is all set to establish its presence in the Middle East market after confirming a deal to acquire Souq. Amazon confirmed on Tuesday that it had completed the acquisition of the Dubai-based online retailer and this is expected to provide the required foundation for the e-commerce giant to enter the 200 million customer Middle East market. It is not yet clear how much the acquisition cost but as of the last round of funding, Souq was valued at nearly $1 billion. Rumors about Amazon’s plans to acquire Souq surfaced last week with several publications quoting insider sources that had prior knowledge of ongoing negotiations.
TechCrunch also went ahead to note that the acquisition could have cost Amazon somewhere in the ballpark of $650 Million, but of course, these are all unconfirmed reports. Nonetheless, it appears as if Amazon is rolling out its global distribution plan in the e-commerce sector. The e-commerce sector globally is expected to be worth up to $6.7 trillion by 2020 and while China’s AliBaba has remained steadfast as Amazon’s number one competitor, the US e-commerce giant has been making significant gains to expand its global presence and reach. The acquisition of Souq could just be the start of a series of such deals.
Amazon’s Senior Vice President of International Consumer Business said that the full acquisition is expected to be fully completed by the end of the year. The VP also complimented Souq adding that the Dubai-based retailer had already pioneered e-commerce in the Middle East while delivering an exemplary experience for customers. Amazon said that while it will accord as much support as possible to Souq, it was also looking to learn more about the Middle East market and the kind of dynamics that may not necessary apply in other countries around the world.
The Amazon deal is also a game changer for Souq. The company’s founder, Ronaldo Mouchawar, a Syrian-born entrepreneur, noted that becoming part of Amazon is a huge step that would help increase efficiency in deliveries, empower sellers better, and also provide a much improved customer experience moving forward.
For many analysts who have been assessing the global e-commerce trends, Amazon entry into the Middle East is a sober move that will largely help diversify its markets. The strategy of leveraging on the infrastructure and market acumen of an already established e-commerce company in the region is expected to make it easier for Amazon to establish a foothold in the Middle East as it plans more expansion and dominance in the online retail sector across the region. Besides, Souq was already the biggest e-commerce retailer in the Arab world and its association with Amazon will help maintain this status moving forward into the future. How everything pans out remains to be seen but so far, it seems Amazon is on the right track.
