Amazon Confirms Souq Acquisition in the UAE, Expansion Strategy Sharpens

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Amazon announced today that the rumors were true, after all. The e-commerce giant confirmed that it has agreed to acquire Souq, a leading e-commerce player in the Middle East. Amazon didn’t disclose the financial details of the deal, but according to TechCrunch it is valued at around $650 million.

“Amazon and share the same DNA – we’re both driven by customers, invention, and long-term thinking,” said Russ Grandinetti, Amazon Senior Vice President, International Consumer. “ pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We’re looking forward to both learning from and supporting them with Amazon technology and global resources. And together, we’ll work hard to provide the best possible service for millions of customers in the Middle East.” (From Press Release)

“We are guided by many of the same principles as Amazon, and this acquisition is a critical next step in growing our e-commerce presence on behalf of customers across the region,” said CEO and Co-Founder Ronaldo Mouchawar. “By becoming part of the Amazon family, we’ll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon’s great track record of empowering sellers.” (From Press Release)

After chasing the largest economies around the world, the company’s international expansion strategy has changed, and the new targets are countries or cities with high GDP, high internet penetration and a relatively small size. You can read more about our analysis of Amazon’s new International Strategy here.

The e-tailer has made three massive moves this year. They are in the process of establishing their operations Australia, their launch in Singapore has been delayed, but expect them to be there before the end of this year, and now, they have a foothold in the Middle East as well.

The pattern Amazon seems to be following is being played out in the United States as well, something we’ll be covering in a subsequent article. The company is getting into the largest markets first with basic offerings, and then gradually building up their physical capabilities in the region while they keep adding more and more services. What’s worked for them in the United States should ideally help them grow elsewhere as well.

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