Often described as the Amazon of the Middle East, Dubai-based Souq.com is now officially part of the Seattle-based e-commerce giant.
Founded in 2005 by Syrian-born entrepreneur Ronaldo Mouchawar, Souq finally reached an agreement with Amazon for a sum reported to be between $650 million and $750 million. That’s down from the rumored $1 billion price tag that floated around in late 2016. In a surprise twist, real estate developer Emaar Properties reportedly made a counteroffer of $800 million right before the two retailers sealed the deal. “Amazon and Souq.com share the same DNA,” said Amazon senior vice president Russ Grandinetti in a press release. The acquisition is expected to close before the end of 2017.
Here’s what’s in store for Amazon:
Pros:
  • An $8.5 billion online retail market in the Middle East, up from $6 billion in 2014 and growing.
  • Access to seven countries through Souq.com: U.A.E, Saudi Arabia, Kuwait, Egypt, Bahrain, Oman, and Qatar.
  • An inventory of 8.4 million products and control of nearly 78% of e-commerce traffic in the Middle East and North Africa.
  • 45 million website visits per month.
  • 10 million mobile app downloads on Android.
Cons:
  • Mohamed Alabbar, the founder of Emaar Properties, is set to launch Noon.com, his own regional online retailer, with $1 billion in financial backing.
  • Even without Noon, the Middle East already has a plethora of e-commerce companies, including Wadi, Namshi, and Mumzworld.
  • 86% of adults in the Middle East don’t have a bank account, forcing online retailers to rely on cash-on-delivery payments, a financial headache.
  • GDP per capita varies wildly: Saudi Arabia’s is more than $23,000; Egypt’s is 13% of that.