Kuwait has more than four million Internet users. Due to COVID19 pandemic, eCommerce which was limited to online banking and financial brokerage services is expanding to other sectors such as education and public services. As it stands today, most Kuwaiti companies have been forced to have an online presence by conducting business-to-business or business-to-consumer transactions.
The Kuwait Government’s e-Government website offers services for both individuals and businesses. An electronic signature law, based on the United Nations Commission on International Trade Law (UNCITRAL) laws on electronic commerce, has been approved, and e-signatures are used by some government offices.
eCommerce can be divided into two categories: external eCommerce (from international to Kuwait) and internal (from Kuwait to Kuwait).
International eCommerce (International to Kuwait):
Despite its wealth and large consumer base, the Middle East market has not made much headway when it comes to e-commerce. Mall culture in the Arab Gulf is very prevalent, and the poor performance of early eCommerce players in the region left a lingering mistrust of online shopping as a whole compared to Europe and the United States.
Several obstacles are preventing eCommerce from reaching its full potential. Consumer awareness about international e-commerce is low, with only 50% of internet users aware of e-commerce platforms. Shoppers also have difficulties in assessing the quality of products and ease in returning goods. Savvier customers prefer international online platforms, which offer more choices and easier shopping.
Expatriates constitute two-thirds of the population in Kuwait. High-income Kuwaitis and the wealthiest of the expats are the primary users of eCommerce. Local delivery services are encouraging eCommerce and launching new products to attract customers. For example, in 2018 DHL launched the EasyShop service for customers who are interested in shopping from international stores online and ready to bear the high cost of shipping and customs clearance. Some local companies have implemented online shopping platforms, preferring to process orders through a single location in the United States, which then sends bulk shipments to Kuwait to reduce shipping and customs charges for its clients.
The top countries from which Kuwait makes online purchases are the United States and the United Kingdom. The most popular eCommerce sites are Amazon (U.S. and U.K.), Net-A-Porter, and department stores such as Bloomingdale’s, Nordstrom Rack and others. Nowadays, regional platforms such as Namshi, based in Dubai, is increasing in popularity.
Most banking transactions are conducted online. Paying bills online is the most common practice, and the most used payments methods are Visa, Mastercard and American Express.
eCommerce trade is flourishing across the globe accounting for more than 14% of global retail sales and is leading to a paradigm shift in both how consumers buy and how businesses sell.
Kuwait is not an exception to this phenomenon and offers strong economic and demographic fundamentals for the growth of eCommerce.
It wouldn’t be an exaggeration to term eCommerce as one of the key sunrise sectors of Kuwait for the new decade. The sector aligns with Kuwait Government’s objectives of promoting innovation and entrepreneurship and has been driving start-up activity over the last decade.
The eCommerce industry is constantly evolving execution models with each business trying hard to carve a niche and create value per customer.
There are promising signs for the growth of eCommerce in Kuwait:
Favorable Demographics: High mobile and internet penetration (>90%) in Kuwait coupled with a young population (56% 2 under the age of 35) with a high disposable income
Emerging Ecosystem: Public sector initiatives such as Kuwait National Fund for Small and Medium Enterprises, home business licenses, and private sector incubators and accelerators, venture capital firms are emerging to support the growth of the eCommerce segment.
No longer limited to legacy sector: Kuwait’s eCommerce activity which was primarily dominated by food and beverage (F&B) and retail (personal care, grocery and electronics) segments previously, is now seeing innovation around untapped segments such as home services, laundry, real estate, etc.
Investment inflow from the private sectors: Kuwait’s eCommerce firms have been more dependent on regional investors than local investors for funding. With increasing examples of success stories, the sector is now finding a more receptive environment with Kuwaiti corporates, investment firms and family businesses as a potential investment avenue.
Evolving business models: To maximize value per customer in a market with high customer acquisition costs, select eCommerce businesses in Kuwait managed to pro-actively pivot their business models around niches such as influencer-based selling, data and analytics-driven models such as loyalty business, sector-focused one-stop-shop approach etc.
The use of social networks is high in Kuwait across all ages, including both Kuwaitis and expats. WhatsApp is commonly used across all nationalities, while Instagram, Twitter and Snapchat are popular among Kuwaitis. Facebook is popular among expats.
For launching, promoting or advertising a product or a service and taking into consideration the target audience, Instagram and Snapchat are the best platforms to reach the Kuwaiti population. This is because target audiences can easily be reached. Kuwaiti social media influencers are frequently hired to market products, services, and promote social events. With a significant number of followers, some companies view this method to be an effective way to deliver content to a large audience.
Residents of Kuwait use social networks for both social and promotional purposes. Among informational activities, the most popular actions include receiving news and information ranks highest, closely followed by exploring various links on social networks to direct users to external web pages.