How can European retailers unlock growth opportunities in the Middle East, North Africa and Pakistan?

The ecommerce boom driven by the COVID-19 pandemic has created ample opportunities for European retailers to tap into new markets and grow their business. Our latest research report exploring the state of European retail reveals that 96% of consumers in the UK and Europe shopped online during the pandemic — up from 60% in 2019.

And while there is plenty of room for growth on the continent, opportunities also exist beyond its borders.

Like Europe, the way consumers in the Middle East, North Africa and Pakistan (MENAP) shop has transformed in the past eighteen months. Consumers are now spending significantly more online and are also purchasing a wider variety of products and services. This behavioral transformation, combined with strong demand for European goods and services, makes the region ripe for expansion.

So, how exactly can Europe's progressive online retailers position themselves for success in MENAP? Here are three aspects to consider.

1. The growing popularity of digital payments

Consumers across MENAP have embraced the shift from physical to digital retail. For instance, our research finds that 95% of UAE and Saudi Arabia consumers regularly shop online.

This shift to online commerce — coupled with new hygiene concerns around cash brought about by the COVID-19 pandemic and various government initiatives — has also been the catalyst for rapid growth in digital payments.

As Mo Ali Yusuf, our MENAP Regional Manager, explains: "Many traditionally cash-centric countries in the Middle East are now converting to higher rates of digital payments. The pandemic has spurred a payments revolution of sorts, and it's not going away."

Retailers from Europe looking to enter MENAP should challenge any outdated assumptions they have around the dominance of cash. Instead, they should focus on understanding the region's evolving digital payment landscape and offering a range of digital payment options, such as cards, digital wallets and local payment methods.

But suitable payment methods is only one-half of the equation. European retailers entering the region also need to focus on optimizing authorization rates, given only 33% of consumers will retry a failed transaction. And to do that, merchants need access to granular data that details why payments have failed.

2. The growth of commerce on mobile devices and social media

MENAP typically enjoys good internet connectivity and mobile device ownership. By 2015, 95% of the population was using mobile internet, with 19 million mobile subscriptions by 2017. The population is young, highly digitally literate and tech-savvy. For example, UAE residents are among the top ten globally regarding time spent on the internet and social media, averaging nearly eight hours a day.

Indeed, many online consumers across MENAP have bypassed traditional ecommerce on laptops or desktops and shop predominantly through mobile devices and channels. Forty-five percent of online consumers prefer to purchase products or services via an app. And 14% are most likely to shop on social apps and shoppable adverts.

The future of digital retail in the region will be based around mobile apps and social commerce. New entrants must prepare for this if they're to steal a competitive advantage. This means understanding where and how MENAP's consumers are shopping and developing unique and differentiated payment flows suited to each channel by using a solution like Payment Links.

Read more: what are payment links?

3. The need for an agile and adaptable approach to payments

MENAP is a retail landscape where retailers must operate in multiple currencies within and across borders. Preferred payment methods vary by country and local payment methods, such as mada in Saudi Arabia, KNET in Kuwait and Benefit in Bahrain, are often king. Regulations and payments infrastructure also vary by country too. So, whichever way you look at it, there can be no one-size-fits-all approach to doing business in the region.

“We work with a lot of suppliers, but only a few are true partners. The team at Checkout.com works hard to understand our exact needs and tailor the advice they bring to the table."

Hassan Mahbub, Head of Strategy, Careem Pay

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Given its complexity, European retailers need support from partners to find success in the region, especially when it comes to payments. This means merchants must ensure their payment provider has the coverage, local connections, compliance tools, payment methods, data and the infrastructure required to scale at speed.

An ideal payments partner should also have on-the-ground teams with deep local expertise. The tailored advice and insights they offer can provide retailers entering the region with a strategic advantage as they'll be able to help them solve issues quickly and capture growth opportunities as they arise.

Unlocking MENAP's growth opportunity

It is evident that there are abundant growth opportunities for Europe's online retailers, both at home and overseas. And Checkout.com has the technology, experience and expertise required to support merchants when they're ready to expand into MENAP. See our customer stories page to learn more..