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By Mayank Sharma
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January 20, 2023 11:37 am

Middle East leads the world in digital penetration

Rising adoption presents unique opportunity, finds McKinsey
Digital penetration
Digital penetration

A McKinsey research on three markets in the Middle East — Egypt, Saudi Arabia, and the United Arab Emirates, has discovered 9 key trends that companies in the region can use to plan their growth strategies. 

Summarizing the report, Samuel Huber, CEO of LandVault said the Middle East is currently experiencing a “digital awakening,” with internet penetration increasing by 20% annually and smartphone ownership increasing by 15% annually. This has led to a significant increase in e-commerce and digital payments, with the report estimating the e-commerce market in the region to top $48 billion by 2025. 

Commenting on the rapidly expanding adoption of gadgets and services which coincides with the growth of the region’s internet sector, Navdeep Sharma, co-founder, ReelStar pointed out that with more than 53 million people online, web users in the region outnumber those in North America despite having far fewer household devices per capita than in the US or Europe.

McKinsey believes these figures should present businesses in the Middle East with several new options to reach consumers via current and emerging digital channels. 

Read more: Digitization, AI dominate investment trends for the next 30 years

Mobile first

 

Based on the study, Bradley Allgood, CEO, and co-founder of Fluent Finance said the transformation of digital services in the MENA region has been significant, driven by a positive perception of innovation, with mobile applications taking the biggest share of engagement, emerging as the most widely used digital channel.

This coincides with the insight gleaned by AppsFlyer whose data also shows that people in the Middle East are extremely mobile-first. Pointing to their Shopping App report, AppsFlyer’s General Manager Western Europe and MENAT, Paul Wright said that in contrast to the slowdown in most other markets such as Europe or North America, their report shows that markets in the Middle East record a higher share for Non-Organic Installs (NOI), “meaning that marketers have long recognized the huge revenue potential of their mobile apps and are investing heavily in them.”

Harishkarthik Gunalan, CEO of CoinFantasy believes businesses have long been aware of the need for digital transformation to stay competitive, given the economic pressure, increased digital usage, and changing consumer trends among a youthful, tech-savvy population. 

“The UAE is at its forefront in terms of national adoption of digital shopping, healthcare, and clothing—a trend that may be influenced by Dubai’s robust mall culture. However, for consumers to convert to digital channels, there may need to be a significantly superior value proposition,” said Gunalan.

Personalization is key

 

Based on their experience as a CRM agency, Nate Taylor, Commercial Director at Flourish – Customer Journey Marketing thinks that personalization holds the key with the one size fits all merchandising or offer solutions (whether in-store or online) becoming a thing of the past.

Taylor believes retailers need to re-evaluate their approach to digital experiences and should invest in tools and initiatives that can provide them with first-party data to map out customer signals, needs, and wants.

“By doing this, they can begin to deliver personalized experiences at scale; from contact touchpoints like e-mail and SMS to in-store experiences, online content, and offers that are tailored to a customer based on their behavior, previous purchases, and interests,” explained Taylor.

However, serving up a satisfactory digital experience isn’t easy, says Mena Migally, Regional Vice President of Emerging EMEA at Riverbed. He points to the tectonic shifts in hybrid work and networks that have made it harder to keep digital services accessible, high performing, and secure. 

“The good news is that organizations in the region recognize the importance of these investments and are placing the necessary emphasis on the technologies, such as Unified Observability and Application Acceleration, in order to ensure they can deliver flawless digital experiences,” said Migally.

The rise of the Metaverse

 

The report also shows a positive upward trend in the interest of the metaverse in the region. 

“We’ve already noticed regions such as the Middle East leading the web3 space, and findings such as this are indicative of that,” said Huber agreeing with the findings of the report. He believes the web3 industry will continue to take the world by storm, and herald the next chapter in digital adoption.

“It will draw billions of users and transform how we communicate, shop, play, and conduct business online enabling a much [more] cohesive and inclusive environment,” concluded Huber.

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