While Mohamed Alabbar, Chairman of the state-supported firm Emaar prepares to launch his own retail website in a country known for its luxury malls as compared to online shopping, Amazon bought Middle East’s biggest online retailer – ‘Souq.com’. A joint statement described that this move will expand Amazon’s influence into the Middle East.
Amazon will leapfrog into the crucial Middle East markets of Egypt, the Unites Arab Emirates and Saudi Arabia soon. The reach of Amazon will boost over the zenith with this strategy as these places already has local operations, courtesy of this Dubai-based retailer.
Souq.com’s status as a free-zone firm also means Amazon will be able to run a 100 per cent foreign-owned operation. As a private company, Souq.com hasn’t had to file public earning reports, though the website last year raised more than $275 million in a round of financing that the company would fuel its future growth.
Dubai being the commercial capital of United Arab Emirates, home to the long-haul aircraft carrier Emirates and the world’s busiest international airport; has luxury malls that includes an indoor ski slope. During summer, the heat crosses over 122 degree Fahrenheit which makes malls a major attraction for shopping and chilling out.
A lot of online firms to provide service in Dubai but online retail shopping hasn’t really boosted like it has in the Western countries. Last year Alabbar received a $1 billion investment in the rising e-commerce venture from Saudi government’s Public Investment Fund. The same wealth fund invested $3.5 billion in ride-hailing app Uber. Alabbar also holds stakes in delivery company Aramex, which could prove useful for online retailer.
On Monday, Emaar Malls disclosed to the public that a $800 million bid was made for Souq.com in a filing on Dubai Financial Market. This bid has been made to maintain in line strategy to align e-commerce with physical shopping. Now that Amazon is setting up shop in Dubai, market is likely to change.