B2B ecommerce in the Middle East and North Africa (MENA) region is projected to reach $3 billion in 2025, up from $1.2 billion in 2022, according to a report published last December by RedSeer Management Consulting Pvt. Ltd.
Helping drive the growth of B2B ecommerce in the region is the expanding number of active internet users, especially mobile Internet users. RedSeer projects the mobile internet penetration rate in the MENA region will reach 53% of the region’s
population, or 357 million people, by 2025.
Other factors driving B2B ecommerce growth in the MENA region include lower product pricing and procurement costs, price transparency, automated credit solutions, online review of products quality, more product variety, delivery tracking, and improved stock management, Hassan Awada, senior vice president at Kroll, a New York-based consultancy tells, YourStory Gulf Edition, a news site for startups and businesses in the Gulf region.
The potential for explosive B2B ecommerce growth in MENA has caught the attention of several governments in the region, including those in the United Arab Emirates and Saudi Arabia. The governments of both countries undertaken substantial digital initiatives as a core part of their respective visions for the future, YourStory Gulf Edition reports.
In 2021, for example, the Abu Dhabi Investment Office and Microsoft for Startups announced a five-year partnership to help regional B2B businesses with innovation and technology. Abu Dhabi is the capital of the UAE.
Kuwait is another country that aims to become a financial and trading hub by 2035, with B2B ecommerce playing a major role in that transformation, according to the YourStory Gulf Edition article. “The B2B value chain is quite fundamental to how commerce is done within the regions, and governments are looking to digitize this starting with POS at retail outlets,” says Akshay Jayaprakasan, an associate partner at RedSeer MEA, says in the article.
Despite projections for rapid B2B growth in the MENA region and globally—global B2B ecommerce is projected to reach $47.7 billion by 2030, growing 11.8% annually, according to a report by Research and Markets—Jayaprakasan feels that the achieving sustained growth will be operationally complex.
“There are numerous business model choices that need to be made at a category and stock keeping unit (SKU) level to achieve the optimal balance between growth and profitability,” Jayaprakasan says. “It takes time and good-quality data to develop expertise in the segment. Players need to be more prudent with their approach considering the current funding winter.”
To achieve economies of scale in the MENA, many B2B ecommerce players have gone into acquisition mode. For example, Retailo Technologies, a Saudi-based restocking platform for retailers, recently acquired DXBUY, a UAE-based B2B online store, to expand its business in the hotels, restaurants and cafes sector. MaxAB, an Egyptian-based wholesale grocery retailer recently acquired Y Combinator-backed WaystoCap to expand its business across Egypt and North Africa’s B2B retail and ecommerce markets, YourStory Gulf Edition reports.
While consolidation can initially fuel market growth, companies on acquisition sprees should tread cautiously, as too much consolidation can stymie growth. “Consolidation at an early stage in the cycle of a new sector can be detrimental, as it could reduce competition, resulting in less innovation and growth,” says Kroll’s Hassan.
Along with consolidation, Hassan argue players in the B2B ecommerce space should also focus on boosting customer retention through continuous innovation and expanding their services especially in the face of global supply chain issues and inflationary pressures.
“Nevertheless, consolidation will generate synergies and economies of scale, reducing operating costs which will ultimately be passed to the end user,” he tells YourStory Gulf Edition. “The sector will definitely enjoy significant investment and M&A activity as it continues to grow.”
To compete with B2B ecommerce growing through acquisitions, new entrants in the space should focus on adopting newer technologies such as artificial intelligence, machine learning and robotics to improve their services, says Mohit Shrivastava, chief analyst, ICT, for Future Market Insights says in the article.