Amazon’s international retail plans are getting more exciting by the year. After upping its India investment to $5 billion last year, the e-tail giant has now agreed to buy Souq.com, one of the most well-known online shopping portals in the Middle East.
Souq was recently valued at $1 billion in a funding round, but has lost some of that valuation since. Amazon has agreed, in principle, to acquire 100 percent of Souq’s assets.
Souq was formed in 2005 as an online auction site, but has since become the go-to portal for online retail as a marketplace. Amazon already sells some of its merchandize to customers in Dubai through an arrangement with Souq.com when online shoppers can buy Amazon Echo devices, Kindle products and even Fire TV.
For Amazon, this is one of their biggest acquisitions in recent times, but it saw the opportunity and is latching on to it. To build out an infrastructure takes time, so Amazon likely decided to take a shortcut and acquire on-the-ground assets so it can spread across the Middle East market quickly and in a big way.
Souq.com primarily serves the UAE, Saudi Arabia, Egypt and other key markets in the region, where smartphone penetration is considerably high. The United Arab Emirates had a smartphone penetration level of nearly 80% as of April 2016, and is very close to the United States’ 81 percent (per comScore) as of December 2016.
More than smartphone penetration, however, it’s the high levels of disposable income that is most likely attracting Amazon to invest in that part of the world. The UAE is expected to have a per capita income of $76,380 by 2020, compared to an estimate of $67,938 for the United States.
So, obviously, there’s a lot of money to be made for an e-commerce company with the kind of name and reputation Amazon has built around the world.
Though the deal is yet to be finalized and financials disclosed, this deal is very likely to give Amazon a big boost in the region, allowing them to expand aggressively in the UAE and nearby markets.
Thanks for reading our work! Please bookmark 1redDrop.com to keep tabs on the hottest, most happening tech and business news from around the world. On Apple News, please favorite the 1redDrop channel to get us in your news feed.
