What makes MENAP the ideal environment for E-commerce startups?

Over the last few years, the B2B marketplaces have gained more popularity than ever, with no signs of slowing down. According to recent research by Digital Commerce 360, collective sales on B2B marketplaces grew 130% year on year in 2021 to $56 billion, making them the fastest-growing segment in B2B e-commerce.

This growth was further fueled by the shift from traditional buying to digital, which wasn’t merely a regional but a global phenomenon. In 2021, B2B E-commerce platforms Sary, MaxAB, and Capiter raised $163M collectively to drive MENA’s E-commerce ecosystem.

The MENA region has contributed immensely to the growth of the startup space, catalyzed by the pandemic which unlocked a whole new dimension for entrepreneurs and startups to explore. The E-commerce sector was especially reshaped by grocery shopping and B2B startups, which highlighted a critical shift in the digital economy.

While E-commerce has seen success in regions across the world, MENAP in particular has been a hotbed of innovation owing to the following reasons:

Shifted trust towards Ecommerce

While previously, user experience set many stores on cost-saving, the pandemic-induced lockdowns brought forth the need for speed and convenience. Post-pandemic people had developed an increased dependency on electronic devices to complete their day-to-day businesses and requirements.

Although financial infrastructure was and still is a challenge across remote and rural areas, widespread access to mobile networks seems to have bridged the gap. The Middle East has a 97% smartphone penetration, which is one of the highest in the world.

Additionally, this led to a spike in funding with E-commerce in MENA recording its all-time funding high in 2021 at $457M with a YoY increase of 224%.

Market Scalability

Driving the growth of the E-commerce proposition in the region is also the golden child of the sector, Q-commerce. Q-commerce unravelled new heights during the pandemic. With the promise of delivering groceries in 30 minutes or less, startups like Egypt’s Rabbit and Pakistan’s Airlift were able to scale their businesses in 2021, riding the wave of instant delivery galvanized by the pandemic.

The scalability of the market offering and the innovative technologies especially in the B2B sector is what drove the investors to initially dip their toes in the E-commerce pool to later fully immerse in it. Among the most active investors in the region are Flat6Labs, 500 Global, and OQAL.

If we zoom into the different markets across the region, the UAE and Saudi Arabia have the lion’s share of e-commerce and digital payments, making them prime markets for e-commerce.

There have been at least nine startups in Egypt and Pakistan alone serving in the B2B category that have raised $1 million or more. In Pakistan, four startups, including Jugnu, Tajir, Dastgyr, and Bazaar have raised $10 million or more.

Sary, the Riyadh-headquartered Saudi B2B e-commerce marketplace is the best-funded player in this category with over $112 million in funding. It had raised its latest $75 million in a Series C round last year.

Regulation is on its way but growth will continue

Like in other parts of the globe, regulation around e-commerce is topical for those operating in the region. Encouragingly, though, regulators in MEANP are proactively encouraging innovation and enabling fintechs. And, while the exact perimeters of regulation will and do vary from country to country, it is fair to assume that the e-commerce trajectory will not be curtailed in any of them.

Owning both the business and merchant relationship gives them a great advantage and lots of data points and insight into spending habits to help drive future embedded services in the region.

All in all, the year 2022 witnessed the B2B Ecommerce Market size up on a new generation of digital buyers, shifting the curve of organizational purchasing permanently online and unravelling new trends that could drive the growth in digital sales.

In addition to all this, the new B2B buyers have made digital transformation the key to surviving and thriving in the e-commerce world. The process of shifting from traditional to digital can be long and hard, but with the right strategy and tools, it can also be accelerated.

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