After it was first announced its its intentions in March, Amazon has now entered into the Middle East with its acquisition of Souq.com, described by many as the Amazon of the Arab world. The valuation of the deal is not known as yet, although the figure of $650 million has been mooted by Techcrunch and Bloomberg have reported that the deal could be worth $1 billion.
Who Are Souq.com?
Souq.com is known as the Amazon of the Arab world and sells more than 1.5 million products online to customers across the Arab world including Saudi Arabia, the United Arab Emirates and Egypt. Previously, the company has secured investment totalling $275 from Naspers and Tiger Global.
The website and ecommerce platform was founded in 2005 by a group of individuals including Ronaldo Mouchawar. Initially an auction site that was linked to the internet portal Maktoob, in 2011 Souq.com changed its strategy and model and it becomes an online shopping site like Amazon with a marketplace and retail items for sale. As of March 20, it has sold over 8.4 million products across a range of 31 categories that include, household goods, baby, fashion, electronics, health and beauty. The website gets around 45 million visits per month.
Now the acquisition has been made, the two companies said today that they have completed an initial integration with will enable users wherever they are to log into Souq.com using their Amazon credentials. Then, the next plan is to integrate all of the services and products that are offered across the two sites which will enable them to leverage their respective scale. In an announcement that was released following news of the acquisition, Souq.com highlighted the potential to integrate with Amazon’s global customer base and seller status to boost its business.
“It is an exhilarating time for the ecommerce industry in the region. Together with Amazon, our goal is to offer our customers the widest product selection, great prices, improved delivery times and first-rate customer service,” said Souq.com CEO and co-founder Ronaldo Mouchawar in a press release. “Integration of Amazon’s technology and global resources with our local expertise will help us to offer a great service to our loyal customers.”
The deal is a good one too for Amazon as it enables them to gain a firm footage into one of the most promising areas of the world for ecommerce, an area that has a huge potential to grow significantly. The region has a total of 50 million consumers and is a relatively untapped market, with just 2% of all retail spend being done online. The deal is also an indicator that Amazon are not just prepared to develop their own offering to grow their business, but are willing to buy their way to.