3 reasons why cross border e-commerce from Egypt will flourish going forward

The Egyptian E-Commerce market has been growing at very healthy rates since 2011. In fact, it’s been one of the few sectors that has been going against the grain given Egypt’s mostly unstable economic and political environment since the Jan 25th revolution in 2011.

According to the”State of Payments Report 2016″ published by leading regional payments company PayFort, Egypt’s turn over in E-Commerce physical goods in 2015 was 1.84 Billion USD, growing at approx 20% YoY with a projection to reach 7.30 Billion USD by 2020. These numbers only represent domestic transactions of physical goods sold online.

Due to the recent awareness and interest in E-Commerce, as well as 60% of the population under the age of 30 with high exposure to the internet and international business trends and innovation; a new revolution of local design and manufacturing has appeared in the local market. The local market has witnessed an explosion of fashion designers, local manufacturing of products with raw materials readily available in the market. The previous is now accompanied with utilisation of creative branding and readily available online marketing tools via social media and other channels, as well as, exploration of new sales and distribution channels.

With the Central of Bank of Egypt’s (CBE) recent decision to float the Egyptian pound in November 2016, the local market experienced a cost of living and inflation spike it has not witnessed previously. Government restrictions on imports were placed on many consumer products, permanently or temporarily, to protect foreign currency reserves at acceptable rates. Access to hard currency for importing became a challenge for many traditional importers. Cost of travel and purchases from abroad more than doubled with the USD rate increasing from 8.88 EGP to over 19 EGP at some times.

As a result, the local brands created over the last few years are filling in the gap as substitutes for the local consumer. With a fast growing and young population of almost 100 M people the consumer culture in Egypt is strong, despite of the current economic challenges. Large Egyptians businesses are taking advantage of the shortage of imported goods, via factories expanding their production, and retailers are opening more shops to reach more consumers. Some of the aforementioned and many micro businesses and SME’s are also going online to reach local consumers cheaper and faster via E-Commerce or Omni-Channel rather than through physical brick and mortar only. The creation of pure online players is now becoming the trend in Egyptian retail. Brands and portals such as @PalmaEgypt , @SnuggsEgypt , @Qui.Fashion , @FitnessHubEg , @BeitMatta , @JoudHome , @StyleTreasure , @Joviality.egypt and many more are growing at very healthy rates by being pure online sellers of their own brand or focusing on being a niche marketplace for a focused audience.

With the recent currency devaluation, the prices of locally designed and manufactured products have become increasingly attractive to international markets. The Egyptian products can now very strongly compete on quality as well as price with products from traditionally exporting countries in Europe and Asia.

From my personal perspective the sectors that are experiencing great strides and innovation locally are: apparel and fashion, leather goods, women’s accessories, jewellery, home accessories and furnishings, and health and beauty products.

To sum up, here are my three reasons why cross border E-Commerce will flourish from Egypt:

  • The creativity and quality of Egyptian products have tremendously improved over the past 5 years. In fact, as a nation, I believe we have always been creative, but have struggled to find direct channels to present and monetise these products. With the weak economic situation and the shortage of well paid employment for Egyptian youth, new avenues have opened up through E-Commerce to encourage more micro businesses and SME’s to connect directly with their consumers, whom could be local or global.
  • The devaluation of the Egyptian Pound has made the price of Egyptian goods extremely competitive in international markets. In fact, the devaluation now allows for the retail price of the goods plus the cost of international express shipping to still be competitive in nearby markets such as the GCC, Africa and Europe. Hence, you will see many Egyptian online retailers in the near future offering “Free Shipping Worldwide” to international markets which will definitely boost sale conversion.
  • As a culture and a nation, we love advertising and marketing. It’s not far fetched to say that Cairo may have the world’s highest Billboard per square meter density if that’s a statistic that is being captured! Furthermore, digital marketeers have become extremely professional of what they can do and the conversion percentages they can achieve. Therefore, it will not be difficult to find their target consumers for high quality products with attractive prices, combined with a reliable logistics partner to deliver it in a fast, reliable, and affordable manner.

I firmly believe the current domestic economic, hopefully, “short term” pain is the best thing that could have happened to the Egyptian economy. Egyptian DNA comes out when Egyptians have their backs against the wall. And the past few years, economically, the country has been stretched to its economic limits. Yet the young, entrepreneurial and positive Egyptians that are using it to their advantage and finding ways to make a name for themselves, have all my respect. This is your time to shine, take advantage of it.

If you are interested to learn more or have any comments, I can be reached at mahdi@r2slogistics.com