If you live in North America or much of the rest of the world, you probably know Amazon as being your one-stop shop for everything from books to electronics. Amazon has quickly become the online retailer that the majority of the internet’s shoppers have turned to at one point or another. However, in the Middle East, Amazon really doesn’t have the same foothold as they do in the United States.
According to Alexa.com, Amazon, which is the #4 ranked website in the U.S. and 8th world-wide traffic-wise, receives 63.5% of their traffic from the United States. This could be about to change though, if rumors of a Souq.com buyout are true.
According to Bloomberg, the company is currently in talks with Souq.com FZ about potentially acquiring the Middle East equivalent for around $1 billion. Souq.com is a huge e-commerce enterprise that covers much of the Middle East from Dubai to Saudi Arabia and many places in between.
For Souq.com, there have been two major issues which have impeded their growth slightly. One being the lack of credit card users in the Middle East. Many of these shopper simply don’t have access to credit cards, or for one reason or another don’t have a desire to own a credit card. This has made payment for goods purchased on Souq.com a bit complicated. Basically the way things work now is that shoppers much purchase pre-paid cards which can be bought or refilled at local convenient stores and gas stations. One idea which we are not sure if Amazon would implement or not would be allowing payments and perhaps even encouraging payments via Bitcoin — a digital currency which has already been adopted by many major online retailers such as Tiger Direct, Microsoft, Namecheap and many more. If Amazon were to acquire Souq.com, Bitcoin adoption might be key to expanding their presence worldwide.
The other issue that Souq.com faces is their inability to deliver products as fast and reliably as Amazon is able to do so. This is simply due to the lack of shipment centers located within the Middle East. Amazon would undoubtedly be able to fix this problem with their plethora of cash on hand. Would we see an Amazon Prime-like distribution option in the Middle East if such an acquisition took place? Probably not immediately, but within a few years it would not be surprising.
At this point in time, the acquisition rumors have not been confirmed by either company, but it certainly will be interesting to follow the development of this story, as it could have huge ramifications for both companies.