Tradeling, the hyper-growing eMarketplace focused on business-to-business (B2B) transactions in the MENA region, has released a study highlighting five key trends in the B2B e-commerce sector. The White Paper, Pivoting to Digital: The Transformation of B2B e-Commerce in the Middle East, shows how the unprecedented challenges brought on by the global pandemic necessitated a new model of retail that is driven online.
The top findings of the survey, one of the first authoritative studies on the impact of the COVID-19 pandemic on trade and business confidence in the region, focused on five key areas: Business Community, Growth Industries, E-commerce, Small and Medium-Sized Enterprises and COVID-19.
Tradeling commissioned PSB Middle East, a global strategic research and analytics consultancy, to run an independent survey in the United Arab Emirates and Kingdom of Saudi Arabia. The findings reveal the opinions of 500 business decision-makers in both key markets. Of the respondents, 384 were in managerial positions and 116 in Managing Director or higher. Nearly half of the businesses (247) employed less than 100 employees and the rest (253) had over 100 employees.
His Excellency Mohammed Al Zarooni, Director General of Dubai Airport Freezone Authority (DAFZA), said, “The study serves as a blueprint for both the public and private sector by providing an informative and unique perspective on the United Arab Emirates and the Kingdom of Saudi Arabian business community and shows how they are using B2B e-commerce. It highlights the challenges and opportunities for businesses in this active trading region and provides a roadmap for governments and businesses as they navigate a new digital reality brought on by COVID-19.”
He added: “The findings of the Tradeling Pivoting to Digital surveyreveal the unique complexities and opportunities in the world of B2B e-commerce. The results from the UAE and Saudi, two of the most active markets in the GCC, provide evidence-based insights on a new fast-tracked digital world brought on by the pandemic. Whatever held back the growth in e-commerce for nearly two decades, especially in the Middle East region, has disappeared. At the height of the pandemic, customers had little choice but to resort to online shopping, and with it the floodgates of business opportunities opened.”
Marius Ciavola, CEO, Tradeling, said: “We are honoured to present this study, which reiterates our commitment to working together to building a strong trade sector that will continue to be one of the key contributors to the economy. This white paper follows the success of Tradeling’s business model, which encouraged us to study the marketplace further, especially given the lack of informed data on B2B e-commerce. While there are several studies on consumer e-commerce, online B2B trade in the region has gained little attention from researchers, primarily because it has been fragmented in its delivery and continuity.”
The study evaluated the immediate impact of COVID-19 as well as the role of B2B in mitigating it. Nearly two-thirds of all respondents in the UAE and about half (49 per cent) of Saudi businesses surveyed said the pandemic has had a negative impact on their business. However, most companies (79 per cent) expect to make a complete recovery by the end of 2022, and over half (57 per cent) are confident of a business recovery by the end of this year. Businesses reported an increased use of B2B e-commerce due to the pandemic with 82 per cent, on average, citing that their use has increased. B2B e-commerce has had a positive impact on businesses in adapting to a new reality with most businesses opting to conduct transactions online as opposed to in person due to COVID-19.
Evaluating the market sentiment a year after the pandemic, the top finding shows that businesses expect to rebound strongly, with greater investment and higher employment in the year ahead. The survey showed that more than half of businesses (52 per cent) said conditions are ‘good’, highlighting the return to a more positive market sentiment. Positivity about the current market conditions is highest in Saudi Arabia, especially among business-to-consumer companies and more senior employees. In the UAE, while 45 per cent said the existing business condition is ‘good’, 41 per cent said it is neither ‘good’ nor ‘bad’. In Saudi Arabia, 60 per cent of respondents had a positive outlook, with 31 per cent saying the situation is neither ‘good’ nor ‘bad’.
Asked specifically on the status quo to business-to-business customers, 50 per cent of respondents in both countries said the market conditions are ‘good’. Most respondents, especially in the UAE are optimistic that business conditions will significantly improve a year from now, with over three-quarters (78 per cent) in the country sharing their optimism on the business environment improving, compared to nearly two-thirds (68 per cent) in Saudi Arabia. The positive outlook reflects in more businesses expecting to hire further employees as well as increasing their business investment. More than one-third (43 per cent) said they expect the number of employees in their business to increase in the next year. Similarly, when asked about their expectations on investment in their business over the next year, more than half (53 per cent) said it would increase, compared to only 32 per cent who said investment levels will remain the same, and 15 percent forecasting a decline.
The survey found that e-commerce and technology are set to outpace other sectors of the economy in the coming years as they increasingly leverage digital opportunities both in B2B and B2C trade. They see a strong outlook for e-commerce in the medium and long-term, building further on the gains achieved in recent months, as enterprises pivot to a ‘digital-first’ model to engage with their customers. In the UAE, 86 per cent of businesses feel technology will assume greater significant followed by e-commerce at 84 per cent, while both sectors are perceived to grow in importance in equal measure by Saudi respondents at 73 per cent each. Artificial intelligence (AI) and Machine Learning are seen as the most important technology impacting business overs the next five years. Specific to B2B e-commerce, 56 per cent of all respondents see AI as the biggest gamechanger.
The study shows that e-commerce is increasingly becoming a preferred platform for purchasing business supplies in both countries. Nearly half (46 per cent) of all respondents said they primarily purchase online. The majority of businesses in the UAE and Saudi expect the use of e-commerce to become universal in the coming years with more than four-fifths (82 per cent) of respondents saying businesses will use more B2B e-commerce eventually. However, respondents said one of the challenges in driving B2B e-commerce will be the need to strengthen online payments as many businesses in the region use physical payments for supplies. More than two thirds (68 per cent) of respondents said they still make physical payments such as cash or cheques on all orders.
A large proportion of Small and Medium-Sized Enterprises believe that B2B e-commerce offers them opportunities to expand and diversify adding that they are more optimistic that B2B e-commerce will allow a more scalable and diverse range of SMEs to emerge from the region. Eighty-three per cent of all respondents also agreed to the statement that B2B e-commerce will help local SMEs scale by finding new customers across the region and globally.
Alongside the survey, Tradeling also launched the region’s first-of-its-kind B2B business sentiment index, The Tradeling Business Confidence Index, which is an annual platform by Tradeling to present the market dynamics of the Middle East to the world. From the findings of the survey this year, it benchmarks the Tradeling Business Confidence in the region at 53 points. The index splits into two parts, measuring current confidence, and future confidence. “Already we see a very clear difference in the level of confidence in the current economy, at 40 points, compared to the future economy which is at 64,” Ciavola, said.
Pivoting to Digital: The Transformation of B2B e-Commerce in the Middle East is available via tradeling.com in three languages: English, Arabic and Mandarin.