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The "gold rush" in the Middle East is emerging, attracting more and more cross-border e-commerce platforms and sellers, especially this summer.

According to the June data from the authoritative organization Semrush, the Chinese cross-border e-commerce platform SHEIN has become the most visited clothing and fashion shopping site in Saudi Arabia, far ahead of other similar websites.

According to the latest data provided by SHEIN to the reporter of "Daily Economic News" on August 14, in this summer when parties are crowded, the SHEIN platform has indeed entered a sales "explosive period" in the Middle East market. Some women's clothing merchants' brand dresses achieved sales of over 100 million yuan (more than 18 million US dollars) in the first half of this year alone.

SHEIN's booming performance has become a microcosm of the "gold rush" in the Middle East.

The reporter learned that in the Middle East, not only local e-commerce represented by Noon and global established e-commerce companies such as Amazon are rising rapidly, but also Temu, AliExpress, TikTok Shop and other "four little dragons going overseas" have also expanded their market share in this land and continue to increase their investment in the emerging market of the Middle East. In the first half of this year, AliExpress signed famous Saudi football stars Salem Al-Dawsari and Feras Al Brikan as AliExpress Middle East spokespersons, which is a representative event.

It is worth mentioning that recently, Saudi Arabia held a golden beach summer swimwear fashion show for the first time, which was called a "historic breakthrough" because it changed the traditional image of full-body, plain robes. It was also this bold style fashion swimwear show that, in the view of companies such as SHEIN, released a signal that the Middle East market represented by Saudi Arabia is further opening its doors to the world.

However, it is a consensus in the industry that as the Middle East market continues to heat up, many companies going overseas are also experiencing multiple tests of culture, policy, language and resources. Professional development has become the key. (Direct access)

SHEIN exhibits at Dubai's largest shopping festival. Image source: SHEIN

Seizing the fertile ground of e-commerce in the Middle East: Adapting to local conditions is necessary

According to the reporter of Daily Economic News, SHEIN told that this summer, in line with the trend of the "four major industries" (clothing, accessories, sports, and consumer electronics) of the summer economy going overseas, the "Middle East fashion three-piece suits" such as banquet dresses, gorgeous jewelry sets, and quiet luxury men's wear have become the most popular online shopping darlings among Middle Eastern consumers. The women's clothing merchants on the SHEIN platform, whose sales exceeded 100 million yuan in the first half of the year, have grasped the "wealth code" of the combination of the three keywords "Middle East, large size, and dresses".

In fact, as one of the earliest e-commerce platforms to enter the Middle East market, SHEIN entered the Middle East in 2015 and set up an office in Dubai in 2016 to start local market operations. In recent years, SHEIN has often ranked among the top three in the App Store shopping app rankings in the Middle East.

SHEIN said that its bet is on the high growth potential of the Middle East market, which is aimed at young and wealthy customers.

According to the latest research statistics from KPMG, there are more than 20 economies in the Middle East with a population of nearly 500 million, with an average age of 25 to 30 years old, and a clear trend of younger people. Among them, the population under 30 years old in Saudi Arabia and the United Arab Emirates accounts for 40% or even 50%.

The mature Internet infrastructure environment in the Middle East also provides fertile ground for the development of e-commerce.

According to the 2024 Middle East E-commerce Market Insight Report, the average Internet penetration rate in the six Gulf countries (Saudi Arabia, the United Arab Emirates, Oman, Kuwait, Qatar and Bahrain) is close to 99%. Due to the scarcity of offline entertainment in the local area, the number of Internet users in many countries in the Middle East exceeds half. The vast majority of Internet users have the habit of shopping online, and fashion apparel is the most popular star category in their online consumption.

It is also based on the above background that SHEIN said that in-depth exploration of the root of the "Middle East fever" shows that its young population structure and economic strength provide a solid foundation for the continued growth of market consumption. However, to do business well in the Middle East, it requires a deep cultural understanding and professional market operations.

As of now, there is still considerable potential to be tapped in the Middle East e-commerce market.

According to a report by the China Merchants Bank Research Institute, the e-commerce market in the Middle East and North Africa will be worth about US$37 billion in 2022, with a growth rate of 14%. It is expected to reach US$57 billion in 2026, with a compound annual growth rate of more than 11%. From a country perspective, Turkey, the UAE, Saudi Arabia and Israel are the largest e-commerce markets in the Middle East, accounting for more than 70% of the total. Saudi Arabia, the UAE and other Gulf countries have a sufficient young population and strong purchasing power, and their e-commerce markets are developing rapidly.

In addition, compared with the Southeast Asian market where "volume pricing" is prevalent, consumers in the Middle East market have stronger purchasing power.

A cross-border e-commerce merchant whose main category is home furnishings once told the "Daily Economic News" reporter that unlike Southeast Asia, customers in the Middle East are not sensitive to prices and are relatively inclined to choose high-quality goods. "In a market with purchasing power, customers are more tolerant, the customer base will be relatively stable, and our profit margins will be higher."

It is worth mentioning that according to SHEIN, compared with the pursuit of refinement and elegance by European and American fashion people, Southeast Asians prefer bright colors, Japan and South Korea like simplicity and freshness, and the aesthetic taste of Middle Eastern fashion consumers is more "luxurious", whether it is a large skirt dress with full aura, or a jewelry set with a full sense of weight.

This also means that if major platforms and merchants of all kinds want to capture the hearts of consumers in the Middle East market, they still need to "adapt to local conditions."

From SHEIN's perspective, the current economic transformation window in the Middle East is a window of opportunity, and policy dividends continue to be released. Not only in the Middle East, but also in order to become an expert in various overseas market segments, it is necessary to establish a new understanding of local culture, customs, aesthetics, and rules. In this process, the empowerment of professional cross-border websites or platforms can often help merchants to find loopholes and improve their overall strength in going overseas.

New players are accelerating their entry: Is the e-commerce landscape in the Middle East changing?

According to a report from the China Merchants Bank Research Institute, the market concentration of e-commerce platforms in the Middle East is not high, and the competition landscape is initially divided into three parts: local platforms represented by Amazon and Noon and Chinese cross-border e-commerce platforms. Chinese cross-border e-commerce platforms are accelerating their expansion in the Middle East.

As a pioneer, SHEIN has accumulated a wide range of local users and social media fans in the Middle East. It is good at using innovative marketing activities to enhance its influence and has certain first-mover advantages.

Global giant Amazon has long been operating in the Middle East.

As early as March 2017, Amazon acquired Souq, the largest local e-commerce platform in the Middle East, and continued to build logistics, operations, etc. After the supporting infrastructure was basically completed, Amazon began to recruit sellers.

According to Amazon's official data, as of June 2023, the number of Chinese sellers online on the Middle East site has increased by more than 40% compared with the same period last year; in the year from October 1, 2022 to September 30, 2023, the number of Chinese sellers on Amazon with sales exceeding US$1 million increased by more than 25% year-on-year; the number of Chinese sellers with sales exceeding US$10 million increased by nearly 30% year-on-year.

But latecomers should not be underestimated.

The above report mentioned that in 2023, while TikTok and Temu entered the Middle East market through a fully hosted model, they were also investing in supplementing the shortcomings of local logistics and distribution capabilities, and visits and sales began to grow rapidly.

In August last year, Temu officially launched its Israeli site and entered the Middle East market.

Alibaba is increasing its investment and gathering its overseas strength.

It is understood that Cainiao began to build a global smart logistics network before 2017 and launched the cross-border express standard product "5 dollars for 10 days", which reduced the original industry time of 30-60 days to 10 days. On March 19 this year, Cainiao and AliExpress carried out a comprehensive upgrade of "Global 5-Day Delivery", and newly added Saudi Arabia as a service country.

Zhang Zhouping, a cross-border e-commerce expert, told the reporter of the Daily Economic News that logistics plays an important supporting role in the entire cross-border e-commerce industry chain. Logistics is the "last mile" directly facing consumers. The timeliness and service level of logistics are crucial to both cross-border e-commerce platforms and sellers on the platforms. AliExpress has Cainiao as its support, which gives it an advantage in the competition. However, the construction of a logistics system cannot be completed overnight, and it requires time for precipitation and accumulation.

In March this year, AliExpress announced that it had signed two Saudi football stars, Salem Al-Dawsari and Feras Al Brikan, as its Middle East spokespeople. During the Ramadan period in March, AliExpress's huge advertisements covered the streets of downtown Saudi Arabia and the largest highway signs.

According to Alibaba's financial report for the first quarter of fiscal year 2025 (the second quarter of natural year 2024), Alibaba International Digital Commerce Group's adjusted EBITA (earnings before interest, taxes, and amortization) for this quarter was a loss of 3.706 billion yuan, mainly due to increased investment in the cross-border business of AliExpress and Trendyol, which was partially offset by a significant reduction in operating losses due to improved monetization rate and operating efficiency of Lazada.

With heavy investment, the growth of cross-border business has driven the overall revenue of Alibaba International Digital Business Group to achieve a high growth of 32%. Previously, AliExpress also stated that March this year was the first anniversary of AliExpress's global launch of the Choice service based on the hosting model. Choice has improved the cross-border shopping experience with free shipping, free returns and fast delivery promises, driving the rapid growth of AliExpress orders.

Last year, AliExpress also launched local customer service in Arabic to help merchants expand into the Middle East market.

According to Alibaba's official website, Trendyol was founded in 2010 and is one of Turkey's leading e-commerce platforms, providing local consumers with a wide range of product and service choices through its e-commerce business and instant delivery services for food and daily necessities.

It is worth mentioning that Alibaba Group acquired a stake in Trendyol in 2018. It can be seen that Alibaba has already made plans for the Middle East.

The Middle East, a land flowing with "milk and honey", is becoming a battleground for many players. Although the Middle East has young consumers with great potential, it also has different historical, cultural and linguistic environments, which will bring some challenges to Chinese players going overseas. In the long run, SHEIN and other platforms have obvious first-mover advantages, but with the launch of full and semi-hosted services and Alibaba's increased investment in the Middle East market, the e-commerce landscape in the Middle East is likely to change further.

Daily Economic News