Amazon moves to enter Middle East
Global Ecommerce heavyweight Amazon is looking to become a little more global, according to recent news reports. The online retailer has agreed to purchase 100% of Dubai-based ecommerce company Souq.com from shareholders. Souq claims to be the largest Ecommerce site in the Arab world, and sells consumer electronics, fashion, household items and other goods.
Amazon is up an impressive 47% so far this year
SOURCE: Yahoo Finance
Ecommerce is growing fast in the Middle East thanks to a young and technologically competent population. Kuwait, Saudi Arabia, and the United Arab Emirates are amongst world leaders when it comes to mobile phone penetration.
Neither Souq nor Amazon replied to CNBC’s request for comment, but the site claimed that multiple anonymous sources with knowledge of the deal were more forthcoming.
Colin Sebastian, analyst at Baird Equity Research, made the following statement via email:
"Amazon acquires business that they see as tangential to the core Ecommerce marketplace, and in this case, I assume what they gain with Souq.com is a strong local brand, an early leadership position in the Mid-East Ecommerce market, and a team with plenty of local expertise. Jeff Bezos and Amazon are clearly interested in tapping into growth in emerging markets they recently launched in Mexico, they are investing billions in India, and it probably makes sense in other markets to make an acquisition."
The Middle East’s Ecommerce market is currently going from strength to strength, and was estimated to be worth $20 billion last year. Amazon is no doubt aiming to capitalize fast, and capture as much of the quick growth the region offers as possible.
Dominion holds Amazon in its Global Trends Ecommerce Fund.
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