Middle East eCommerce: The Evolving Consumer Dynamics in the FMCG Segment

The eCommerce landscape is expanding as more brands are exploring the global market and local marketplaces cashing in on local sentiments. The Middle East is one of the largest global marketplaces. It caters to shoppers from various ethnicity with wide variations in demand and product choices. Thus, the marketplace is a good mix of products from various other regions, globally renowned brands, and local traditional known names. eCommerce segments like beauty & personal care, electronics, and FMCG (Fast Moving Consumer Goods) have moved up with rapid stride across middle eastern marketplaces.

In recent years, the FMCG sector has stood out among the expanding Middle East eCommerce market. Factors such as population growth, rising disposable incomes, urbanization, and changing consumer preferences have created a favorable environment for FMCG companies.

One of the biggest markets in the region is the UAE with predicted eCommerce revenue for 2023 estimated around US$11,782.3 million. The next is the KSA (Kingdom of Saudi Arabia) with annual eCommerce revenue of approx. US$8.53 billion in 2022 which is expected to hit US$20.01 billion revenue mark by 2027.

Source: Mordor Intelligence Report

FMCG companies on eCommerce, Quick commerce, and D2C platforms in the Middle East are poised for continued growth and success if they stay attuned to changing consumer dynamics. Brands can thrive in this dynamic market and capitalize on the opportunities presented by the region’s evolving consumer landscape.

Let’s take a deep dive to examine the current state of the FMCG industry in the Middle East and its future prospects with evolving consumer dynamics.

Understand the Arabian Way

Global FMCG companies in the Middle East need to adapt products, packaging, and marketing strategies to align with local tastes, preferences, and cultural considerations will help companies establish strong connections with consumers.

The eCommerce market size of Middle East by 2025 is expected to reach US$27 billion, growing by US$10 billion from 2020.

Source: Mordor Intelligence Report

Brands on the eCommerce platforms need to continue focusing on diversification to stay relevant in the market. The Middle East’s young and digitally savvy population will continue to drive the adoption of e-commerce, making it imperative for FMCG companies to establish a strong online presence and optimize Delivery Turn-Around-Time (TAT) to cater to evolving consumer behavior that demands swift delivery.

Market Trends:

The Middle East has become a crucial market for FMCG products. The growing middle-class population, rapid urbanization, and expanding eCommerce retail infrastructure have driven the demand for consumer goods. Additionally, the region’s young and tech-savvy population has embraced e-commerce platforms for FMCG purchases, presenting opportunities for both local and global companies. To stay ahead in the fiercely competitive landscape brands must:

  • Track global & local competitors’ products performance vs yours across eCommerce platforms
  • Monitor Search of Search and Visibility Share across platforms & locations
  • Identify new opportunities -demographics or geographies to target in your market segment
  • Set market strategies based on insights & analytics
  • Enhance content to suit the local shoppers’ needs by identifying high-performing keywords

Shifting Consumer Demands:

Consumer preferences in the Middle East are evolving rapidly. While traditional brands and products still hold significance, consumers are increasingly seeking healthier and more sustainable options. The value-first shoppers are leading the growing demand for organic, natural, and ethically sourced products. FMCG companies are responding to these changing preferences by introducing innovative offerings and expanding their customer base but need to track what going on in the segment to stay ahead with market and competitor insights.

About 46% of the budget-conscious shoppers in the UAE consistently choose private label products whenever available, and they are playing a substantial role in driving notable growth rates, particularly in the food and beverage sectors.

Source: Brain & Co. Report

Digital Transformation:

Post-pandemic consumers have become accustomed to the convenience of online shopping and are relying more on digital platforms for FMCG needs. This shift has compelled FMCG companies to invest in e-commerce capabilities, competitive analytics solutions, and omnichannel strategies to remain competitive.

In the Middle East, consumers are utilizing multiple channels, especially smartphones, to access eCommerce platforms and purchase various products online. A significant number are now shopping online at least once a month, and a PwC survey found that 73% of buyers prefer buying groceries through online platforms.

Localization and Diversification:

The Middle East consists of diverse markets, each with its own cultural nuances and preferences. FMCG companies that have successfully localized their products and marketing strategies have gained a competitive advantage. Adapting to local tastes, preferences, and religious considerations is crucial for long-term success. Furthermore, diversification into adjacent sectors such as personal care, hygiene, and household products presents new growth opportunities.

Around 69% of UAE consumers and 63% in Saudi Arabia are willing to pay more for quality products, especially those with health benefits. Since 2020, about 75% of UAE consumers have opted for healthier alternatives while shopping, with 33% choosing organic products and 23% preferring sugar-free options.

Source: Brain & Co. Report

Future Outlook: The future of the FMCG industry in the Middle East appears promising. FMCG companies that embrace digital transformation, invest in e-commerce capabilities, and the adoption of advanced technologies like AI-ML-driven data analytics, and automation will enhance operational efficiency and improve the customer experience.

The future of eCommerce in the Middle Eastern region looks promising, thanks to its well-connected, digitally savvy audience. With retail penetration already at 11-12% and growing, over 80% of buyers use mobile devices and 70% use social media to reach sellers. Internet penetration is nearly 100%, with 80% of users already making purchases online. Around 85% of buyers are tech-savvy and comfortable with digital payments. The region’s growing buying power and government support for eCommerce initiatives make it an ideal place where the eCommerce market will expand further in the future.

Final Thoughts

The FMCG industry in the Middle East is undergoing significant growth and transformation. By adapting to changing consumer preferences, leveraging e-commerce, and focusing on sustainability, FMCG companies can capture market share and drive profitability. Doesn’t matter if you are a newbie to the middle eastern eCom market or a global FMCG market player you need competitive intelligence to carve your space in the region across countries, platforms, and market segments. mScanIt, digital commerce intelligence can prove to be a vital solution for global tracking of your SKU’s performance vis-a-vis competition.

The middle eastern eCommerce market is expanding brands need to be adaptable, understand local markets, and invest in innovation and optimizing customer experience. The future of the FMCG industry in the Middle East looks promising, paving the way for continued growth and success.

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