A study conducted by research firm Arab Advisors Group (AAG) concluded that while the potential for Internet ventures in the Arab world is not very clear yet, enough ground exists for solid business models and ventures to succeed if planned and executed carefully.
AAG based its assessment of e-commerce business models in these countries on what it calls the “e-commerce pillars,” which include Internet usage penetration levels, infrastructure development, education levels, financial services, such as the availability and usage levels of credit cards and debit cards, and income levels.
The study covered the markets of Saudi Arabia, UAE, Kuwait, Oman, Qatar, Bahrain, Jordan and Egypt. According to AAG, there are currently more than 2.04 million Internet users in the combined Internet market for the eight covered countries. This figure is expected to grow to more than 3.5 million users by 2002, a cumulative annual growth rate (CAGR) of 31.4 percent.
AAG estimated the total Internet users in the whole of the Arab world, including the rest of the Levant countries and the Arab countries in North Africa at more than 3.1 million users by the end of 2000.
The study emphasized the crucial importance of Internet fundamentals such as solid margins and economies of scale, adding that online ventures in the Arab world might have an opportunity to reach profitability on relatively lower revenues.
It said that established businesses that add an Internet-based channel to their existing sales channels will have the biggest chances for success. As such, a very lucrative market potential strongly exists for payment and back office infrastructure providers, such as Application Service Providers.
Overall, the report concludes that early stage genuine e-commerce and online ventures market potential exists in the Arab world and is growing fast. However, AAG stressed that not all models will succeed, and regional ventures can use the ongoing shakeout in the North American and European Internet markets as a very useful benchmark for what could work and what will not. — (Lebanon Invest)
© 2001 Mena Report (www.menareport.com)
