DUBAI // Amazon.com, the world's largest online retailer, has signed an agreement with the Saudi-based e-commerce service provider Taufeer.com to sell its products to customers throughout the Middle East. The two companies are aiming to create an Arabic portal for Amazon, while consequently alleviating some of the difficulties involved in the overseas shipping process.
Amazon will become available through Taufeer's e-Channel service, which was launched last month and is designed to give retailers a fast and easy entry into online retailing without significant investment. Taufeer.com, part of Taufeer Information Systems, also provides a shopping comparison service. Hamdan al Marshudi, an online business consultant and the founder of several Dubai-based e-retail websites, including EllaMart.com, said the agreement was a boost for the region.
"If Amazon is entering the region, there is a reason for it - there is a lot of money [to be made] out here," he said. "The money is here, but the e-commerce environment isn't. Amazon, being the biggest player, will really encourage a lot of other well known companies to enter the region as well. "This is a great step forward for this region to work directly with the global e-commerce community. We are really lacking this, especially since there are some problems here with regard to the payment gateways and other issues."
Yasser Abdullah, the founder and chief executive of Taufeer, said the company was excited about signing up the mega retailer to its e-channel programme. "After careful analysis and testing by Amazon.com, our advanced comparison shopping service was selected for its simplicity and ease of integration with Amazon.com infrastructure," he said. Founded in 1994 in the US, Amazon launched as an online bookstore but grew at lightning speed, incorporating everything from VHS and DVD films to CDs, computer software, electronics, furniture, toys and even food. Amazon has independently operated websites in the UK, Canada, Germany, France, China, Italy and Japan.
The company reported a 41 per cent increase in net sales in the second quarter to US$4.06 billion (Dh14.7bn). International net sales jumped 47 per cent, fuelled by the healthy economies of many emerging markets, to $1.89bn. Despite the gloomy economic outlook for many Western countries and an overall slump in consumer spending, online sales are increasing steadily, leading many retailers to expand their cyber domains in an effort to increase profit margins.
In the UK, online sales rose by 11.3 per cent in July compared with the previous month. The IMRG Capgemini e-Retail Sales Index showed Britons spent more than £4.8bn (Dh31bn) online in July, the equivalent of £79 for every person in the UK. However, online retailers caution that even in the virtual world, international expansion must follow careful strategic guidelines. In 2006, eBay was forced to shut down its China-based website and replace it with a joint venture run by the Beijing-based web portal Tom Online.
Various challenges including payment obstacles and the lack of a proper address system have stalled the regional online business from taking off to its full potential. Internet World Stats, a research firm that measures web use around the world, estimates that there are 41.9 million internet users in the Middle East today, up from just 3.3 million in 2000. Currently, Amazon delivers to a number of Middle Eastern and Central Asian countries, including the UAE. However, many problems have been reported in the delivery process, including delays of more than one month. The website does not facilitate delivery to Saudi Arabia, Qatar, Kuwait or Lebanon.
"We have many customers from the Middle East who shop on Amazon.com websites," said Craig Berman, the director of strategic communications for Amazon. "Taufeer has signed up for our associates programme, and is one of hundreds of thousands of websites that refer traffic and sales to Amazon." @Email:vsalama@thenational.ae