$1 billion venture to revolutionise Mideast online shopping
Abu Dhabi - The newest addition to the United Arab Emirates’ e-commerce sector has timed its arrival perfectly, experts said, but consumers will have the final say on whether Noon.com proves to be the game changer that its creators intend it to be.
Unveiled in November, Noon.com, the brainchild of Dubai-based billionaire businessman Mohamed Alabbar and Saudi Arabia’s Public Investment Fund (PIF), plans to launch in January and offer 20 million products, the equivalent of the contents of 13 Dubai shopping malls.
Such is the scale and scope of the venture that it needs a warehouse the size of 60 football pitches to store the goods it will be making available online, and the staggering nature of the numbers attached to the logistics are matched by the financial figures.
Noon.com will offer same-day delivery for certain products, including clothing, books, toys, sport and outdoor equipment and electronics with a secure payment gateway called NoonPay as well as a mobile app.
Investors are expected to inject an initial $1 billion into the project, of which the Saudi sovereign wealth fund will own half, with the remaining 50% being owned by Alabbar and other regional investors.
As online shoppers in the UAE and Saudi Arabia, where Noon.com will first launch, wait to see what it has to offer, Alabbar describes it as turning “the e-commerce environment in the Middle East upside down, and then we’re going to turn it upside down again in another six months”.
Tushar Singhvi, vice-president of corporate development and investments at Crescent Enterprises, believes this confidence is well-placed in Noon.com, which takes its name from the Arabic letter “N”.
“As a logistics hub for the Arab region and a centre of innovation, the UAE has seen its e-commerce segment grow exponentially, essentially feeding into the GCC (Gulf Cooperation Council) and North African markets,” he said. “The region’s digital readiness, promising retail sector, growing youth population and internet connectivity are just some of the drivers of this trend.”
Pointing to Souq.com and its 2 million products as the trailblazer, Singhvi said other companies such as Careem, Fetchr and Namshi are “catching up fast” and energising the UAE’s online ecosystem. “This is an indicator of just how much venture capital and private equity investment in digital businesses have grown over the past few years,” he said.
“Putting this into perspective, the MENA (Middle East and North Africa) region closed over $750 million in tech start-up investment deals between 2013 and 2015. In other words, for ventures such as Noon.com, the timing could not be better — and, in fact, the company stands to benefit both from the growing trend of online shopping in Saudi Arabia, the UAE and the rest of the GCC, and the fact that as the region takes an active interest in diversification goals, consumer cyclicals such as retail, and specifically e-commerce, are likely to see an uptake in the coming years.”
For Ambareen Musa, founder and CEO of leading UAE price comparison website Souqamal, Noon.com is symbolic of the strength and vibrancy of the country’s consumer economy as well as of its focus on innovation.
However, as with any venture, she said the only way of knowing whether Noon.com can live up to the hyperbole surrounding its launch comes after it starts operations in the new year, and when consumers pass judgment through their spending and use of their time.
“The retail sector is one of the key pillars of the economic growth of Dubai,” Musa said. “According to Dubai Chamber of Commerce and Industry, the sector has been growing by an average of 5% each year and is expected to reach $54.5 billion by 2017.
“To add to this, consumer behaviour is constantly moving more and more towards the digital space, and the introduction of Noon.com is proof of the adaptability of our ecosystem. It is a great addition to the digital space of the UAE, and I think it will be interesting to see how consumers react to another entrant to the industry.”